Pakistan: the Monetary Fund wants gasoline to increase. Will it fuel internal tensions?
The Pakistani government has raised fuel prices starting Friday to meet a key condition placed by the International Monetary Fund for the relaunch of its bailout program.
Prime Minister Shehbaz Sharif's administration has raised the cost of gasoline and diesel by 30 rupees per liter each (€ 0.14), Finance Minister Miftah Ismail said in a Twitter post. The decision comes a day after the two sides ended a week of talks without reaching an agreement to revive the stalled loan.
Government has decided to increase the prices of Petrol, High Speed Diesel, Kerosene Oil and Light Diesel Oil by Rs 30 per liter from Friday May 27, 2022. New prices will go into effect at midnight. The new price of petrol will be Rs 179.86 & diesel will be Rs 174.15 per liter.
– Miftah Ismail (@MiftahIsmail) May 26, 2022
The resumption of the IMF bailout should provide the necessary help to keep the South Asian nation's economy afloat and avoid a default. Shares plummeted and the Pakistani rupee fell 9% in the past month, posting the worst performance among Asian countries, according to data compiled by Bloomberg. The country's dollar stock fell to an all-time low last week.
The program announced in 2019 was suspended earlier this year after ousted Prime Minister Imran Khan slashed fuel prices and then froze them for four months, costing the government $ 600 million a month in subsidies. Premier Sharif has postponed the price hike three times since he came to power on April 11, causing markets to panic over whether the government will be able to resume the IMF program.
The Fund team stressed the urgency of "concrete policy actions", including the elimination of subsidies for fuel and energy and budgeting for fiscal year 2023 to meet the program goals, the IMF said in a communiqué dated 25 May. But there is a problem: the fuel increases have led to the demonstrations and protests that caused the fall of the Khan government. At that time, fuel cost 136 rupees per liter, now it will reach 180. This will have a noticeable effect on inflation at a time when the prices of basic necessities are also rising. The IMF wants a government that is not afraid to apply even highly unpopular policies, but, given the growing tension and what has happened in Sri Lanka, it risks being left WITHOUT a government that obeys, and this in a nuclear power.
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The article Pakistan: the Monetary Fund wants to increase gasoline. Will it fuel internal tensions? comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/pakistan-il-fondo-monetario-vuole-laumento-della-benzina-alimentera-le-tensioni-interne/ on Fri, 27 May 2022 13:52:02 +0000.