Hike funding

Pakistan hikes fuel prices to unlock IMF funding

KARACHI, Pakistan (Reuters) – Pakistan said on Thursday it would raise fuel prices so it can resume receiving aid from a $6 billion package signed with the International Monetary Fund in 2019, the country said. country’s finance minister.

Prices will rise by 20% from Friday, causing long queues to form at gas stations as the news spreads. The new price for petrol will be 179.86 Pakistani rupees (about 90 US cents) per liter and diesel will be 174.15 rupees, the minister, Miftah Ismail, said in a tweet.

Reuters reported earlier on Thursday that the IMF and Islamabad had reached an agreement to release more than $900 million in funds, once Pakistan scraps fuel subsidies and raises prices, according to a Pakistani source directly involved. in the talks in Qatar.

“When we raise fuel prices, the deal will be done. We have worked out the outlines of a deal,” the source said in a text message after the talks in Doha ended.

Rising prices have been the main issue between Pakistan and the IMF as part of an agreement to remove subsidies in the oil and electricity sectors to reduce the budget deficit ahead of the presentation of the annual budget this month next.

Ousted Prime Minister Imran Khan had made the grant during his final days in office to calm public opinion in the face of double-digit inflation, a move the IMF said deviated from the terms of the deal. 2019.

In addition to the $900 million, if the IMF approves the seventh review following the talks, it will also unlock other external financing for the cash-strapped South Asian nation, whose foreign exchange reserves cover less than two months. of imports.

About half of the funds for the $6 billion deal have yet to be released, and it is unclear when the IMF review will take place.

The IMF said considerable progress had been made in the talks, but stressed the urgency for Pakistan to remove fuel and energy subsidies to get back on track.

The IMF representative in Pakistan did not immediately respond to a Reuters request for comment.

Pakistan’s new government, which took office in April, has been reluctant to remove caps on fuel prices.

Pakistan’s government on Thursday convened a joint session of parliament to discuss the economic situation after the talks, according to an order seen by Reuters.

Pakistan’s consumer price index rose 13.4% in April from a year earlier.

A removal of fuel subsidies would likely have political consequences for the new coalition government, with elections expected within 16 months.