TRADE & ECONOMY

Before a deal, Pakistan's new fuel subsidy programme must be agreed by the IMF.

2023-03-24
Before a deal, Pakistan's new fuel subsidy programme must be agreed by the IMF.

Since early February, the coalition government and IMF have been negotiating a deal that would release $1.1 billion to the 220 million-person nation that is severely short on funds.

 

The most recent problem is a proposal to increase fuel prices for wealthy consumers, which was made public by Prime Minister Shehbaz Sharif last week. The money raised would be used to subsidise prices for the poor, who have been severely impacted by inflation, which in February reached its highest level in 50 years.

 

Musadik Malik, the minister in charge of petroleum, said to Reuters on Thursday that his department had been given six weeks to develop the pricing strategy.

 

A staff-level agreement would be signed after a few outstanding issues, including the fuel scheme, were resolved, according to Ruiz in a message to Reuters.

 

The IMF’s resident representative in Pakistan, Esther Perez Ruiz, said the government did not consult the fund about the fuel pricing scheme.

 

She added that the fund would request more information from the government regarding the fuel proposal, including information on how it would be put into practise and what safeguards would be put in place to prevent abuse.

 

The petroleum and finance ministries did not immediately respond to a request for comment.