Pakistan may massively increase petroleum prices under IMF pressure

Pakistan may massively increase petroleum prices under IMF pressure

Pakistan may announce a massive increase in petroleum prices in order to meet the conditions set by the International Monetary Fund (IMF).

The country reviews the petroleum prices on fortnightly basis and the next review is scheduled on January 31, 2023. However, the prices may go up before the scheduled announcement in case the government slapped sales tax or levy through the ordinance.

READ MORE: Pakistan decides not to increase petroleum prices till Jan 31

Reportedly, the government is planning to introduce mini budget for generating additional PKR 280-300 billion as demanded by the IMF.

The IMF loan program under Extended Fund Facility (EFF) was stalled for the past many months and it derailed external position of the country.

READ MORE: Pakistan maintains petroleum prices for first fortnight of 2023

According to the announcement the prices effective from January 16, 2023 are: High speed diesel price is at Rs227.80. The price of petrol is Rs214.80. The price of kerosene oil is to Rs171.83. And the price of light diesel oil is Rs169.

Experts were believing that the government would increase the prices because of IMF demand to raise the revenue. But the government despite the pressure made last two fortnight decisions.

READ MORE: Pakistan may surprise in next petroleum price revision on Dec 31

The country is already facing high inflation due to massive depreciation in rupee value. The rupee fell to PKR 235.20 against the dollar during intraday interbank trading on January 26, 2023.

The further increase in petroleum prices would make it difficult for masses to manage their day to day affairs.

Pakistan is highly dependent on imported fuel to meet domestic demand.

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The previous government of PTI had kept both the petroleum levy and sales tax at zero in order to provide relief to the masses. The PTI government also provided a huge subsidy on prices of petroleum products in order to lower the rates and provide relief to the masses.

However, former Prime Minister Imran Khan was removed through a vote of no-confidence motion on April 10, 2022. Since then the new coalition government led by PML-N increased the prices of petroleum products sharply.

The present government in the budget estimated to collect Rs855 billion as petroleum levy during the fiscal year 2022/2023.