Bailout hopes from IMF forces Pakistan to hike fuel prices by ₹30

The prices of petroleum products in Pakistan shot up on Friday after the Shehbaz Sharif-led government, left with fewer options to prevent the country from spiralling into a deeper economic crisis, reduced the fuel subsidies by a record margin. The Pakistan government hiked the cost of all petroleum products by ₹30 in local currency, the highest single-hike ever.

Reports from Islamabad, as reflected in a hurriedly called press conference by finance minister MIftah Ismail, suggest that the move has been taken to placate the International Monetary Fund (IMF) for an economic bailout.

The latest hike has raised the ex-depot prices of petrol to ₹179.86 per litre, high-speed diesel to Rs174.15, and kerosene to ₹155.56, according to local media reports. Despite the record single-hike in prices, the government would be still bearing a cost of ₹56.71 per litre on high-speed diesel, ₹21.83 on petrol, and ₹17.02 on kerosene. This means there is still a lot of scope in the subsidy reduction and if this doesn’t change for Pakistan for good, the Sharif government may be forced to do away with all subsidies gradually.

The price rise has given new ammunition to Imran Khan Niazi, whose government left the country’s economy in tatters, to target the newly-formed Sharif government. Niazi called the government “incompetent” and “insensitive” for not pursuing the deal with Russia to purchase discounted oil. Lately effusive in his praise for India’s foreign policy, Niazi again highlighted how India, a close ally of US, managed to reduce excise duty on petrol and diesel by purchasing discounted oil from Russia.

“Now our nation will suffer another massive dose of inflation at the hands of this cabal of crooks,” the former PM tweeted.

Imran Khan Niazi is trying to mount a challenge to the coalition government by forcing them into calling early elections but Sharif said the National Assembly would decide the date for the next general elections and former Pakistan PM’s “dictation won’t work.” During a Parliament session in Pakistan, Sharif lashed out at the Pakistan Tehreek-e-Insaaf chairman and said: “I want to clarify to the leader of this group (PTI), your dictation won’t work. This house will decide when to hold elections.”