ISLAMABAD: Pakistan on Wednesday announcement massive increase in petroleum prices effective from February 16, 2023.
The government increased the prices up to Rs22.20 per liter in petroleum products.
According to the finance division the new rates of petroleum products effective from February 16, 2023 are:
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Petrol rate has been increased by Rs22.20 to Rs272 per liter from Rs249.80
High Speed Diesel (HSD) rate has been increased by Rs17.20 per liter to Rs280 per liter from Rs262.80.
The rate of Kerosene oil has been enhanced by Rs12.90 to Rs202.73 per liter from Rs189.83.
The price of light diesel oil (LDO) has been increased by Rs9.68 to Rs196.68 from Rs187.
The finance division said that increase in price was due to Pakistani Rupee (PKR) devaluation applicable for the calculation of current pricing period.
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The prices were raised after the rupee crashed against the dollar on January 26, 2023 and continued its free fall. The local currency fell to the all-time low of PKR 276.58 to the greenback on February 03, 2023. However, the local unit made recovery to end at PKR 269.44 by end of trading at interbank foreign exchange on February 13, 2023.
The local currency fell sharply after the government allowed market forces to determine the exchange rate. During past five months the government capped the dollar rates, which adversely affected the export earnings and inflows of remittances. On the other hand, the capping of the dollar resulted in a black market making huge different between rupee/dollar rate in interbank and unregulated markets.
The country is facing economic crisis like situation and negotiation a bailout package with the International Monetary Fund (IMF), which was stalled for the past many months.
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Reportedly, the government is planning to introduce mini budget for generating additional as demanded by the IMF. Which may also include imposition of sales tax on petroleum products.
The IMF loan program under Extended Fund Facility (EFF) was stalled for the past many months and it derailed external position of the country.
The final round of the talks with the IMF would be held on February 16, 2023, which if approved then it would pave way for $1.2 billion tranche for the country.
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In order to comply with the IMF conditions the government has already announced phenomenal increase in gas prices. Further, changes such as mini budget and other measures are on the cards.
Experts believed that a storm of price hike is inevitable after the changes made by the government to comply with the IMF conditions.