Pakistan fuel price hits record high; Petrol at Rs. 280/liter
Pakistan announced a record increase in fuel prices on Wednesday, triggering a shock for its already overburdened citizens. The petrol has been hiked at PKR 22.20/liter—bringing it to a historic high of PKR 272/liter. Diesel prices have risen by PKR 17.20/liter. This is the country's second such raise in barely two weeks. Additionally, gas prices have also been hiked by regulators by 113%.
Why does this story matter?
- The Pakistani government on Wednesday introduced the "mini-budget" with the goal of raising Rs. 170 billion in taxes by June.
- Reportedly, Pakistan has been hit by the worst economic crisis in decades, with high inflation, lower GDP growth, and depleting forex reserves.
- An increase in petroleum product prices was one of the International Monetary Fund's (IMF) preconditions for unlocking the $1.1 billion loan.
Pakistan government's announcement about price hike of fuel
According to Geo News, the price of diesel was increased to PKR 280/liter after a hike of PKR 17.20/liter. Meanwhile, the prices of kerosene oil and light diesel oil have also been increased and will now be available at PKR 202.73/liter and PKR 196.68/liter, respectively. The new prices will come into effect from 12:00 am Thursday.
Tax-loaded 'mini-budget' presented to ease crisis
The official announcement comes after the government proposed to raise the Goods and Services Tax (GST) to 18% through its "mini budget" or the Finance (Supplementary) Bill 2023 presented to help raise PKR 170 billion in revenue to ease the economic crisis. A senior economist with Moody's Analytics, however, said that the bailout by IMF is unlikely to put the economy back on track.
Prices of other essential items also increased
Experts said the announcement will also lead to more severe inflation in Pakistan, especially on food items. Prices of daily-use food items have also risen, with milk costing PKR 210/liter and chicken meat costing PKR 780/kilogram. The Pakistani government also raised electricity and gas tariffs soon after the country's virtual discussions with IMF officials resumed on Monday.
Gas prices increased by up to 113% in Pakistan
Pakistan's Oil and Gas Regulatory Authority (OGRA) also increased gas prices by roughly 113% and issued a notification following the Petroleum Division's suggestion, according to ARY News. Gas prices for various sectors, including home users, were raised from 16% to 113%. The increase comes after Economic Coordination Committee (ECC) approved the proposal for hiking the gas price by 112% for domestic consumers on Monday.
Check full notification by regulator here
Pakistan facing economic crisis, negotiating on $6.5 billion bailout package
The IMF officials visited Pakistan last month but departed without a deal after 10 days of talks last week, leaving Pakistan in dire need of finances. Meanwhile, negotiation talks later proceeded virtually to reach an agreement on a reform plan under the country's $6.5 billion bailout package signed in 2019. It remains to be seen if the transaction will be completed.