Sunday Apr 17, 2022
ISLAMABAD: In view of the weak economic situation and the International Monetary Fund's (IMF) displeasure, the PML-N government is likely to revisit its decision of keeping the petroleum products' prices unchanged, according to well-placed sources.
“The government thinks subsidising the masses with this huge multi-billion rupee package for cheap products is not a viable option, and also the International Monetary Fund, which is continuing its programme with Islamabad, is unhappy with this decision,” the sources told The News on Saturday.
On Friday, Prime Minister Shehbaz Sharif had taken a populous decision by rejecting the Oil and Gas Regulatory Authority (Ogra) recommendation of increasing the petroleum products prices and ordered to keep them unchanged in the next fortnight.
Meanwhile, Miftah Ismail, the likely finance minister, took to Twitter and expressed the government’s inability to bear this enormous burden and announced that the government might have to retract its recent decision.
Miftah wrote: "The decision announced last night to continue petrol and diesel subsidies was a tough one and will have to be revisited.”
He said that the “government was losing Rs21 per liter on petrol and Rs52 per liter on diesel.” At this rate, he estimated that the government would lose Rs250 crore [Rs2.5 billion] per day or Rs3,600 crore [Rs36 billion] in two weeks, which is far more than the expense of running the entire civilian federal government plus the entire BISP/Ehsaas programme.”
Interestingly, Ismael went on to blame the previous government for its mismanagement and mishandling of the economy, adding, “the PTI has tied our hands by actually committing in writing that not only will they recover the full cost of fuels but also impose a Rs30 per liter levy and 17% sales tax on those fuels.”
He also underscored that according to the commitments made by the PTI government, the price of petrol and diesel should be Rs236/liter and Rs264/liter, respectively. It is, however, still unclear where the price of petroleum products would stand after the review.
“Prime Minister Shehbaz Sharif is in no mood to impose such prices plus high taxes on the people. But at the same time, we cannot let our fiscal and external financial position deteriorate further and have our development partners walk out. Tough choices need to be made,” he said.
He also said that fuel price subsidy is coming from increasing government expenses and raising debt.
In 2009, Pakistan had gone to the IMF and struck an agreement for a $6 billion Extended Fund Facility over 39 months. So far, Islamabad has received over half of this amount, and the programme is to end in September.
Economists say that since the IMF is also not happy with the previous government for keeping the petroleum products prices unchanged and even reducing them by Rs10 litre, the incumbent government would be forced to jack the prices up.