Islamabad, May 27 Pakistan Prime Minister Shehbaz Sharif’s government on Friday was forced to increase the local fuel prices substantially to clear the way to meet a key condition set by the International Monetary Fund (IMF) for reviving its bailout program, Al Jazeera reported.
The prices of petrol and diesel were increased by 30 rupees a liter each, finance minister Miftah Ismail tweeted. This decision was taken a day after the two sides ended week-long talks without reaching an agreement to revive the stalled loan.
Pakistan’s economy which is in shambles needs the IMF bailout urgently to remain afloat and avert a default. The country which is facing a severe economic crisis has seen stocks tumbling and the Pakistani rupee dropping 9 per cent in the past month, making it the worst performer among Asian nations, according to data compiled by Bloomberg. The country’s dollar bond dropped to a record low last week.
The IMF program announced in 2019 was suspended earlier this year after ousted prime minister Imran Khan reduced fuel prices and then froze them for four months that cost the government $600 million a month in subsidies. Prime Minister Sharif deferred price increase three times since coming to power on April 11, causing the markets to panic over whether the government will be able to resume the IMF program or not.
The IMF’s team emphasized on the urgency of “concrete policy actions,” including in the context of removing fuel and energy subsidies and the 2023 fiscal year budget to meet program objectives, the fund said in a statement on May 25.
The successful resumption of the program will help unlock the remaining $3 billion from the loan program. Pakistan has also requested the IMF to extend its loan program for a year and increase the loan size by a further $2 billion.
