IMF pushes Pakistan to end petrol subsidy
The latest warning under the IMF petrol subsidy Pakistan programme could affect people who depend on affordable fuel for their daily travel and work.
The IMF has said the existing fuel support scheme covers too many people and should gradually come to an end.
It has also stressed that any future relief must be limited, temporary and covered by the government’s approved budget.
“The fuel support scheme should be phased out, given its broad targeting,” an IMF spokesperson told Arab News.
Rs75 Billion Fuel Subsidy Scheme Under Pressure
Pakistan introduced the Rs75 billion fuel subsidy programme in September amid rising international oil prices and tensions caused by the US-Iran war.
Under the scheme, motorcycle and rickshaw users receive a weekly petrol token worth Rs500.
Owners of cars with engines up to 800cc are also eligible for a discount of Rs100 per litre on a maximum of 10 litres every 10 days.
Information Technology Minister Shaza Fatima played an important role in developing and implementing the digital subsidy system.
Prime Minister Shehbaz Sharif also announced that she would receive a Tamgha on March 23 in recognition of her role in implementing the programme.
However, the government's decision to extend the subsidy until December has raised questions about how long the relief can continue.
The IMF wants Pakistan to avoid extending the existing programme further.
Future Fuel Relief May Be Limited
The IMF has suggested that if international oil prices rise again, Pakistan should provide relief only to people who need it most.
Instead of offering broad fuel subsidies, the government should use established social assistance programmes to identify deserving families.
Any new financial support must also remain within the limits of the FY2027 budget.
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Meanwhile, petrol prices in Pakistan continue to put pressure on household budgets. Petrol reached a record Rs458.41 per litre on April 3 before falling to around Rs330 per litre.
Under its loan programme, Pakistan has agreed to allow domestic fuel prices to follow international market rates while providing protection to vulnerable sections of society.
The future of the IMF petrol subsidy Pakistan programme will therefore depend on how the government balances its financial commitments with public relief.
$1.2 Billion Loan Awaits IMF Board Approval
The IMF has also warned that tensions in the Middle East could create further economic difficulties for Pakistan because the country depends heavily on oil and gas supplies from Gulf countries.
Continued instability in international energy markets could increase import costs and put additional pressure on the economy.
Pakistan's inflation rate stood at 9.6 percent in October, compared with 10.3 percent in September.
Meanwhile, the staff-level agreement reached between Pakistan and the IMF last month is awaiting approval from the organisation's Executive Board, which is expected to review it in December.
Following approval, Pakistan is expected to receive around $1 billion under the $7 billion Extended Fund Facility and another $210 million through the Resilience and Sustainability Facility.
These payments would take total disbursements under the programmes to approximately $5.7 billion.
