Finance Minister Miftah Ismail on Thursday announced that the federal government has decided to raise the prices of petroleum products by Rs30 per litre, with the hike set to go into effect at midnight tonight.
The finance minister made the announcement at a press conference in Islamabad and explained that the decision was taken in order to ensure the revival of the International Monetary Fund (IMF) programme.
The price hike comes a day after the government and the IMF failed to reach an agreement on an economic bailout mainly because of the former’s indecision on fuel and electricity subsidies and resultant next year’s budget uncertainties.
New prices (per litre):
- Petrol — Rs179.86
- Diesel — Rs174.15
- Kerosene oil — Rs155.56
- Light diesel — Rs148.31
The finance minister noted some burden had to be passed on to the masses, but despite the massive increase in the price of petroleum products, the government was still bearing losses.
He was of the view that the government was aware of the political repercussions of the decision, saying “we will face criticism but the state and its interest is important to us and it is necessary for us to save it.”
He said the country could have gone in the “wrong direction” if the steps were not taken. He said the decision was a tough one for Prime Minister Shehbaz Sharif, saying “we cannot let the state sink for the sake of politics.”
The PTI-led government had originally agreed to the IMF’s demand of raising the price of electricity and petroleum products but, later in March, Imran Khan announced subsidies on both commodities — and the current government was continuing with the same arrangement.
Miftah noted that following the decision to hike the prices, financial markets would witness stability, the rupee would strengthen, and the economy would get a boost.
Replying to a question, he said due to an increase in the price of petroleum products, inflation would definitely increase.
“What option do we have instead of taking this step?”
He said increasing the price of petroleum products by Rs30 was not an easy decision for Prime Minister Shehbaz Sharif, but he vowed that the incumbent government would take steps to safeguard the economy.
The finance minister stressed that the present government would present the fiscal budget for FY2022-23 and ruled out the formation of a caretaker government, noting that the current set-up would complete its tenure.