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Pakistan Cuts Fuel Subsidies for Second Time in a Week

The IMF stressed the need to end unfunded subsidies, which were costing the cash-strapped country billions per month, in talks with Islamabad that concluded last week


Pakistan's two-month-old government plans to slash petrol and diesel subsidies for a second time in a week in a bid to control the fiscal deficit and secure an IMF bailout.
Supporters of Pakistan's ousted PM Imran Khan take part in a protest rally in Islamabad. The IMF had asked Pakistan to address its elevated fiscal and current account deficits before releasing a bailout package. File photo: AFP.

 

Pakistan’s two-month-old government plans to slash petrol and diesel subsidies for a second time in a week in a bid to control the fiscal deficit and secure an International Monetary Fund (IMF) bailout.

The IMF stressed the need to end unfunded subsidies which were costing the cash-strapped country billions per month in talks with Islamabad that concluded last week.

Finance Minister Miftah Ismail said petrol and diesel prices for consumers increased by 17% at the pumps starting on Friday, up 30 rupees ($0.15) per litre.

The new price for petrol will be 209.86 rupees per litre and diesel 204.15 per litre, he said. Last week, the country raised prices by around 20%.

The IMF and Islamabad had reached a deal to release over $900 million in funds once Pakistan removed the fuel subsidies. Ismail said on Thursday there now remained a subsidy of about 9 rupees per litre.

The subsidies have been the main issue between Pakistan and the IMF to reduce the fiscal deficit before the annual budget is presented later this month.

Former prime minister Imran Khan had given the subsidy in his last days in power to cool down public sentiment in the face of double-digit inflation, a move the IMF said deviated from the terms of its 2019 deal.

 

  • Reuters, with additional editing by George Russell

 

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.