ISLAMABAD: The Pakistani government has decided to make no changes to the existing fuel prices in the country for the next fortnight, Finance Minister Ishaq Dar said on Sunday, instead increasing the levy on diesel by Rs3 in line with the International Monetary Fund's (IMF) condition for the release of more than $1 billion to Islamabad.
The 9th review of Pakistan's $7 billion IMF loan program has been pending since September last year, primarily because of the tough preconditions set by the global money lender. One of the prerequisites is to achieve a petroleum development levy (PDL) to the tune of Rs855 billion ($3.7 billion) by June 2023.
Pakistan maintains that it has a shortfall of Rs50 billion ($219 million) in meeting the PDL target, but the IMF has estimated the shortfall to be at Rs300 billion ($1.3 billion) during the current fiscal year.
The country had already imposed a maximum permitted levy of Rs50 per liter on petrol, but its inability to meet the PDL target alongside other conditions resulted in a delay in the arrival of an IMF mission to Islamabad for the completion of the 9th review and the subsequent release of a $1.2 billion loan tranche.
Yet the government on Sunday announced maintaining the prices of petroleum products until January 31.
“We are not making any changes to the prices of petroleum products,” Dar said in a televised address on Sunday.
The price of petrol will remain Rs214.80, diesel Rs227.80, kerosene oil Rs171.83 and that of light diesel oil Rs169, he said.
Pakistan has for months been embroiled in an economic crisis, with its current account deficit widening, foreign exchange reserves dipping to $4.3 billion and the national currency depreciating against the dollar.
The South Asian country is desperately looking for external financing, particularly a loan tranche from the IMF, as the specter of a default on its international payments looms large.
Financial experts believe the decision to maintain prices will have no immediate impact on the release of the next tranche of loan from the global lender.
Dr Khaqan Najeeb, a former advisor at the finance ministry, said while the prices of petroleum products had not been changed, the PDL on diesel had been increased by Rs3 to take it up to Rs35. It was maintained at the maximum level of Rs50 for petrol, he added.
"This is in line with what the government has agreed with the IMF to raise the PDL until April 2023 on both petrol and diesel to generate revenue of about 1% of GDP for FY23," Najeeb added.
Pakistan last reduced the prices of petroleum products by up to Rs10 per liter on December 15.