Finance Minister Miftah Ismail announced Thursday a massive hike in the price of petroleum products after the International Monetary Fund (IMF) emphasised abolishing the subsidies on the commodities.
In a press conference, the finance minister said the government has decided to hike the price of petrol, diesel, kerosene oil, and light diesel by Rs30, effectively from May 27.
New prices (per litre):
Petrol — Rs179.86
Diesel — Rs174.15
Kerosene oil — Rs155.56
Light diesel — Rs148.31
The finance minister noted some burden was shifted on the masses, but despite the massive increase in the price of petroleum products, the government was still bearing losses, but vowed to soon strike a staff-level agreement with the Fund.
Pakistan and the IMF could not reach a staff-level agreement a day earlier after the Fund said there were deviations from the policies that were agreed between both sides.
The PTI-led government had originally agreed to the IMF's demand of raising the price of electricity and petroleum products but, later in March, Imran Khan announced subsidies on both commodities — and the current government was continuing with the same arrangement.
The finance minister noted that following the decision to hike the prices, financial markets would witness stability, the rupee would strengthen, and the economy would get a boost.
In response to a question, Ismail said due to an increase in the price of petroleum products, inflation would definitely witness an increase. "But tell me, what option did we have instead of taking this step."
Ismail said Khan — going against the IMF deal — had announced subsidies on petroleum products when his government's tenure was coming to an end.
"We are all the owners of a country. How can we afford [such subsidies] that are costing three times more than running the everyday affairs of the governments," the finance minister said.
Ismail said it was an injustice to the lower-income segment of the society that the people who own cars, industries, and generators, are getting subsidies.
"Indeed, this is the failure of the government that inflation is rising [...] but we have provided subsidies on commodities at utility stores and are making sugar available at a lesser cost than Imran Khan's government," he said.
Ismail said increasing the price of petroleum products by Rs30 was not an easy decision for Prime Minister Shehbaz Sharif, but vowed that the incumbent government would take steps to safeguard the economy.
Quoting Defence Minister Khawaja Asif, Ismail said: "Khawaja Asif sahab, in today's talks, noted that it would not be a wise decision to [damage] the state and save our politics."
The finance minister stressed that the present government would present the fiscal budget for FY2022-2023 and ruled out the formation of a caretaker government, noting that the current set-up would complete its tenure.