ISLAMABAD: In view of the gloomy economic situation and the dissatisfaction of the International Monetary Fund (IMF), the PML-N government should reconsider its decision to keep the prices of petroleum products unchanged, according to well-placed sources.
“The government thinks that subsidizing the masses with this huge multi-billion rupee package for cheap goods is not a viable option, and the International Monetary Fund, which is continuing its program with Islamabad, is unhappy with this decision,” the sources said. The news the Saturday.
On Friday, Prime Minister Shehbaz Sharif had made a popular decision rejecting the recommendation of the Oil and Gas Regulatory Authority (Ogra) to raise the prices of petroleum products and ordered to keep them unchanged for the next fortnight. .
Meanwhile, Miftah Ismail, the likely finance minister, took to Twitter and expressed the government’s inability to bear this huge burden and announced that the government may have to reverse its recent decision.
Miftah wrote: “The decision announced last night to maintain gasoline and diesel subsidies was difficult and will need to be reconsidered.”
He said ‘the government was losing Rs21 per liter of petrol and Rs52 per liter of diesel’. At this rate, he estimated 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 operating expenses of the entire civilian federal government plus the entire BISP/Ehsaas program.
Interestingly, Ismael went on to blame the previous government for its mismanagement and mismanagement of the economy, adding, “The PTI tied our hands by committing in writing to not only recoup the full cost of fuels, but also to impose a Rs30 per liter tax and 17% sales tax on these fuels.
He also pointed out that according to the commitments made by the PTI government, the price of petrol and diesel should be Rs 236/litre and Rs 264/litre respectively. However, it is still unclear where the price of petroleum products would be after the revision.
“Prime Minister Shehbaz Sharif is in no mood to impose such high prices and taxes on the people. But at the same time, we cannot allow our external fiscal and financial situation to deteriorate further and see our development partners withdraw. Hard choices have to be made,” he said.
He also said the fuel price subsidy came from increased government spending and rising debt.
In 2009, Pakistan approached the IMF and reached an agreement for an expanded financing facility of $6 billion over 39 months. So far, Islamabad has received more than half of that amount and the program is due to end in September.
Economists say that since the IMF is also not happy that the previous government kept the prices of petroleum products unchanged and even reduced them by Rs 10 liters, the incumbent government would be forced to raise the prices.