Finance Minister Shaukat Tarin has said that the latest increase in petroleum prices is not linked to Pakistan’s talks with the International Monetary Fund (IMF) for the resumption of a loan facility.
“A steep increase in gas prices in the international markets forced the government to take this step,” Mr Tarin said while addressing a press conference at the Pakistan Embassy in Washington on Friday evening.
The Finance Division issued a notification in Islamabad on Saturday about the new petroleum prices. The notification endorsed the finance minister’s argument about a steep increase in international markets, pointing out that oil prices had gone up to an unprecedented $85 a barrel.
Mr Tarin rejected the suggestion that Pakistan was raising oil and electricity prices to please the IMF. He said the government realised that increasing tariffs without structural changes would “increase inflation and make our industry uncompetitive”.
The minister, however, conceded that Pakistan also had to see the IMF’s point of view and he had held “some technical discussions” with them on this issue. “So, we will increase these tariffs in a gradual manner thereby it does not increase inflation a whole lot,” he said.
In July 2019, the IMF approved a 39-month arrangement under the Extended Fund Facility for Pakistan for an amount of $6 billion to support Islamabad’s economic reform programme but is not releasing fresh instalments.
During his stay in Washington, the finance minister held a series of talks with IMF officials on the resumption of the loan facility. Mr Tarin has moved to New York, leaving behind the finance secretary for further talks with the IMF.