ISLAMABAD: Pakistan has assured the International Monetary Fund (IMF) that it may increase petroleum prices as inflation surged to new height.
According to sources, the government informed the IMF that subsidies on petrol and diesel are temporary and will be withdrawn if fiscal space is not available in the upcoming budget. Officials are currently in talks with provinces to create an additional fiscal space of Rs200 billion to maintain fuel prices.
Authorities also indicated that regular adjustments in fuel prices would continue to avoid excessive subsidies. The government has already taken steps to cut expenditures, including reducing fuel allowances for official vehicles, cutting non-salary expenses by 20%, and slashing Rs100 billion from the federal development budget.
Despite a 20% increase in fuel prices, consumption remained unchanged last month, suggesting limited impact on demand.
The IMF has also set new conditions, including a 35% increase in quarterly payments under the Benazir Income Support Programme (BISP), raising the stipend to Rs19,500 starting January next year to offset the impact of rising energy prices.
Additionally, the number of BISP beneficiaries is expected to increase to 10.2 million by June, with more people included in health, education, and nutrition programs.
The developments come as Pakistan seeks to secure a $1.2 billion loan tranche, with IMF approval linked to revenue targets and fiscal reforms.
