Pakistan’s two-month-old government plans to slash petrol and diesel subsidies for a second time in a week in a bid to control the fiscal deficit and secure an International Monetary Fund (IMF) bailout.
The IMF stressed the need to end unfunded subsidies which were costing the cash-strapped country billions per month in talks with Islamabad that concluded last week.
Finance Minister Miftah Ismail said petrol and diesel prices for consumers increased by 17% at the pumps starting on Friday, up 30 rupees ($0.15) per litre.
The new price for petrol will be 209.86 rupees per litre and diesel 204.15 per litre, he said. Last week, the country raised prices by around 20%.
The IMF and Islamabad had reached a deal to release over $900 million in funds once Pakistan removed the fuel subsidies. Ismail said on Thursday there now remained a subsidy of about 9 rupees per litre.
The subsidies have been the main issue between Pakistan and the IMF to reduce the fiscal deficit before the annual budget is presented later this month.
Former prime minister Imran Khan had given the subsidy in his last days in power to cool down public sentiment in the face of double-digit inflation, a move the IMF said deviated from the terms of its 2019 deal.
- Reuters, with additional editing by George Russell