Explained: To please IMF, Pakistan pushing petrol prices to shocking levels

Attempting to appease the IMF by cutting fuel susbidies, the cash strapped Pakistan government has hiked fuel prices to record high amid large protests. Petrol in Pakistan now costs over Rs 260/lt in local currency after a steep 29% hike.

The new prices came into effect from Wednesday midnight and showed a massive hike of Rs 24 per litre in petrol prices and Rs 59.16 per litre of high-speed diesel (HSD) - the two products used by everyone directly or indirectly, Finance Minister Miftah Ismail said.

He said the prices of all products had now been brought to their purchase price and the element of subsidy or price differential claim had been eliminated. “There is no more government loss on the sale of petroleum products,” he said, hoping to conclude an agreement with the International Monetary Fund for reviving loan support.

This is the third cut in fuel subsidies by the government headed by Prime Minister Shehbaz Sharif in about 20 days.
After the new prices, the government finally removed all subsidies given on petroleum which was a key demand by the IMF to restore the USD $ 6billion assistance package signed in 2019.

The need for funds comes as the coffers at the treasury are fast depleting. The total forex reserves held by the country stand at $14 billion as of June 10 — a level that covers imports for just 1.32 months.

Pakistan Prime Minister Shehbaz Sharif defended the unpopular moves, saying that the government was "left with no choice" because of "those who struck the worst ever deal" with the IMF.