Hike in POL prices likely as Pakistan willing to curb fuel subsidies

Washington: Finance Minister Miftah Ismail has agreed with the International Monetary Fund's (IMF) recommendations to reduce fuel subsidies and end a business tax amnesty scheme, pledging to pursue structural reforms to boost a crisis-wracked economy.  

Pakistan's new finance minister, has hinted at increasing petrol and diesel prices—confirming that country has decided to reverse subsidy on fuel products during talks with IMF in Washington.  

Finance Minister Dr Miftah Ismail, who took charge this month, said he had "good discussions" with the IMF on a visit during the Washington-based event organized by US think tank Atlantic Council, 

Speaking during lender's annual spring meetings, Miftah Ismail said that the IMF program of US$6 Billion has been derailed and they would bring it on track. 

Ismail, however, said that some targeted subsidies should remain for Pakistan's poorest amid sky-high global prices. 

Prime Minister Shehbaz Sharif has vowed to jumpstart a moribund economy, certain to be a major issue in elections due next year.

Pakistan has repeatedly sought international support and suffers from a chronically weak tax base.

Ismail said that Pakistan, the world's fifth most-populous nation, needed to move to a new economic model by removing obstacles and promoting exports to the world.

"We have such an elite-benefitting country that almost every subsidy that you can speak of actually goes to the richest people," he stressed.

Ismail said his immediate goal was reining in double-digit inflation— a target complicated by lifting fuel subsidies and kickstarting job creation. 

He denied Pakistan was in danger of defaulting on its debts, with foreign reserves currently standing at $10 billion, and much of its bilateral debt held with friendly countries China, Saudi Arabia and the United Arab Emirates (UAE).

The new Prime Minister has little over a year before he has to call a general election, leaving observers wondering whether ousting Imran Khan will backfire.

But Ismail said there was "never a wrong time to do the right thing".

"If what we claim is true, and we are actually more competent, then we should be able to make a difference in a few months. And if we don't, we'll be thrown out by the people, which is fine."

The Finance Minister reached Washington for talks with IMF which will continue until April 24. 

In 2019, the IMF approved a $6 billion loan for Pakistan but disbursement has been slowed down by concerns about the pace of reforms.

Earlier this month, Ismail had said that the government would make all-out efforts to restore the Extended Fund Facility (EFF) programme with IMF. 

On April 15, Shehbaz Sharif rejected the Oil and Gas Regulatory Authority's (OGRA) proposal to hike the prices of petroleum products in the country.