Petroleum prices to increase with recommendations made by the IMF

Officials said on Saturday that Pakistan has agreed with the International Monetary Fund (IMF) to eliminate power and fuel subsidies and wind down an amnesty program for business taxes to revive a $6 billion loan programme.

According to the government, oil prices will be increased in a staggered way following recommendations made by the IMF, as well as pursuing structural reforms.

It is expected that a hike of Rs10 to Rs20/litre in petroleum products prices and Rs5/unit in electricity tariffs will revive the Fund’s program. In order to avoid a balance of payment crisis, the government has also shown its willingness to undertake much-needed structural reforms in the short-to medium-term, the official added.

Prior to submitting a request to the IMF Executive Board for approval of the 7th Review and releasing the tranche next month, the IMF has said it would impose conditions as agreed by both parties.

Shehbaz Sharif, the new Prime Minister, has vowed to revive a dormant economy, an issue that is sure to dominate the upcoming elections. In addition to seeking international support, Pakistan has a chronically weak tax base. Pakistan, the fifth most-populous nation on earth, should adopt a new economic model by eliminating obstacles and promoting exports worldwide, according to Ismail.

He denied Pakistan was in danger of defaulting on its debts, with foreign reserves currently standing at $10 billion, and much of its bilateral debt held with friendly countries like China, Saudi Arabia, and the UAE