Wednesday July 17, 2024

Petrol price hike: PM Shahbaz vows to take nation into confidence over PTI-IMF deal

"Acutely aware of the impact that a fuel price hike causes," says PM Shahbaz Shahrif

By Web Desk
June 16, 2022
Prime Minister Shahbaz Sharif addresses the nation. Courtesy PMO
Prime Minister Shahbaz Sharif addresses the nation. Courtesy PMO  

ISLAMABAD: Holding the past government responsible for the recent massive hike in the prices of petroleum products, Prime Minister Shahbaz Sharif on Thursday announced that he would take the nation into confidence on the specifics of the International Monetary Fund (IMF)-PTI deal soon.

The prime minister issued that statement a day after the government raised fuel prices, with petrol reaching Rs233.89 — unprecedented in the country's history.

Taking to his Twitter handle, PM Shahbaz said, "Acutely aware of the impact that a fuel price hike causes. Govt is left with no choice but to raise the prices due to the IMF deal that the PTI govt signed. Will take the nation into confidence on the specifics of the IMF-PTI deal soon."

"We will get out of these economic difficulties, InshaAllah," he added.

Criticising the past government's handling of negotiations with the global lender, PM Shahbaz said: "I wonder whether those who struck the worst ever deal with IMF and took patently bad economic decisions have the conscience to face the truth. How can they pretend to be innocent when what the nation is going through is clearly their doing?"

"Details soon," he announced.

The surge in prices, although a highly unpopular move that has the nation fuming, had been a key demand of the IMF for a long time.

Finance Minister Miftah Ismail on Monday said that if the government does not abolish the subsidies on petroleum products by July (in effect raising the prices), then the country will default.

Speaking on Geo News programme “Capital Talk”, the finance minister said the IMF has "insisted" on abolishing the subsidies on petroleum products.

In a bid to bring economic stability and revive the stalled multi-billion-dollar IMF programme, the government had increased the price of petrol by a whopping Rs60 per litre last month.

IMF stresses need for additional measures

In July 2019, Pakistan had signed a 39-month, $6 billion Extended Fund Facility with the IMF. It received disbursements of about $3bn but further tranches were stopped when an agreement could not be reached with the previous government. The lender had expressed concerns over the status of some of its objectives, including fiscal consolidation.

IMF's resident representative on Monday said that additional measures will be needed to bring Pakistan's budget for FY2022-23 in line with the key objectives of its IMF programme.

The next tranche that Pakistan is to receive upon a successful review is $900 million, and a green light from the IMF would also open up other global funding avenues.

Pakistan urgently needs funds in the face of dwindling foreign exchange reserves, which have reached $9.2 billion — enough for less than 45 days of imports.

Pakistan unveiled a Rs9.5 trillion budget for 2022-23 on Friday, aimed at tight fiscal consolidation in a bid to convince the IMF to restart the much-needed bailout payments.

"Our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key program objectives," Esther Perez Ruiz said.

She said the fund was ready to continue to support the authorities’ efforts and in the implementation of policies to promote macroeconomic stability.