Home Latest News Fuel Prices to Remain Unchanged ‘For Now,’ Says Miftah Ismail

Fuel Prices to Remain Unchanged ‘For Now,’ Says Miftah Ismail

Finance minister warns that decision may be revisited and price adjustment come anytime in future

by Newsweek Pakistan

Finance Minister Miftah Ismail addresses a press conference in Islamabad. Photo courtesy PID

Finance Minister Miftah Ismail on Sunday announced that the incumbent coalition government is not ending the subsidy on petroleum products and increasing prices “for now,” while warning that this decision may be reversed at “anytime in the future” to pass on the full burden of international oil prices to consumers.

Addressing a press conference in Islamabad, he said that despite his advice to end the subsidy announced by ousted prime minister Imran Khan, Prime Minister Shehbaz Sharif was “unwilling” to burden the public with additional inflation by increasing fuel prices. This was validated a few hours later, with the Ministry of Energy issuing a notification noting that the premier had rejected a summary of the Oil and Gas Regulatory Authority (OGRA) to increase prices and directed the Petroleum Division to maintain prices at their current levels.

According to the notification, the government would pay a subsidy of Rs. 47.02/liter for petrol; Rs. 86.71/liter for high-speed diesel; Rs. 51.83/liter for kerosene oil; and Rs. 67.84/liter for light diesel oil.

In a posting on Twitter, the finance minister stressed that the current pricing freeze did not suggest the government would “never” increase the prices. “The point is we are not increasing them today, but we can adjust them at any time in the future,” he added.

Earlier, during his media interaction, Ismail reiterated his criticism of the ousted Pakistan Tehreek-e-Insaf (PTI)-led government by slamming it for suggesting it had left the economy in a positive condition. Noting that PTI Chairman Khan had boasted of increasing the country’s foreign reserves, he said there was no evidence to support these claims. “Where have you put the money you speak of?” he questioned the ousted premier.

The minister accused the PTI government of failing to curb the smuggling of wheat and petroleum, adding that its policies had “wrecked” the country’s economic stability. Referring to the Extended Fund Facility the previous government entered into with the International Monetary Fund—which is demanding the new government end the fuel subsidy to revive the suspended bailout—he claimed that the lender had been “promised” the primary deficit would be Rs. 25 billion, while the total deficit would be around Rs. 4 trillion. “The primary deficit has increased from Rs. 25 billion to Rs. 1.32 trillion,” he added, and asked how a government that had only been in power for a month could reduce it.

Ismail claimed that “friendly” countries, including Saudi Arabia, had assured the new government of their economic cooperation and talks were under way to extend the duration of funds they have parked with the State Bank of Pakistan to shore up Pakistan’s foreign exchange reserves. “They have also agreed to negotiate an increase in deposits,” he claimed.

The minister also warned that the current account deficit was unlikely to reduce in the near-term, as imports in the current fiscal would likely hit $75 billion against exports of $30 billion. He said the SBP’s foreign reserves currently stood at $10.4 billion, and blamed the “mismanagement” of the previous administration for this situation. He also claimed that the tax-to-GDP ratio in the previous government had dropped to 8.5%.

The government’s decision to continue the fuel subsidy has been criticized by economic experts, who maintain it is unsustainable and would impact the economic stability of the country. It also risks the IMF refusing to revive the suspended bailout program, a key requirement for other countries and lenders to help Pakistan overcome its economic crises. The government’s indecision over the vital decision has boosted uncertainty, with the Pakistan Stock Exchange continuously losing its value and the Pakistani rupee also continuing a slide against the U.S. dollar.

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