Petrol price in Pakistan hits record high at PKR 272, diesel at PKR 280

Pakistan's government has raised prices of petrol and gas by a massive 113% to a historic high in a bid to secure the critical International Monetary Fund (IMF) loan tranche.

The hike in petrol and gas prices came into effect on 16 February (Thursday), reports Business Today.

Petrol prices have been jacked up by PKR 22.20 per litre in a bid to appease the IMF for reviving the $7 billion extended fund facility (EFF). Gas prices have been hiked from 16% to 113% for different sectors including domestic consumers, according to a recent Pakistan Oil and Gas Regulatory Authority (OGRA) notification. 

After this hike, petrol cost PKR 272 per litre whereas high-speed diesel (HSD) will sell for PKR 280 per litre in the cash-strapped nation. Kerosene and light diesel oil, on the other hand, will sell for PKR 202.73 per litre and PKR 196.68 per litre respectively.

Petrol and gas price hikes were one of the preconditions of the IMF coupled with the new fiscal measures undertaken through the 'mini-budget'.

Inflation is expected to rise in Pakistan after the petrol price rise and the mini-budget. The mini-budget is aimed at reducing the budget deficit and broadening the government's tax collection net. 

The increase comes after the Economic Coordination Committee (ECC) of the Federal Cabinet approved the summary for hiking the gas price by 112% for domestic consumers, classified into 12 categories of protected and unprotected consumers, on 13 February. 

On Wednesday (15 February), Pakistan laid a supplementary finance bill before parliament on Wednesday, proposing to raise the goods and services tax (GST)to 18% from 17% to help raise 170 billion rupees ($639 million) in extra revenue during the fiscal year ending July.

The bill set before Parliament by Finance Minister Ishaq Dar proposed the exemption from the GST rise of "daily use" items such as wheat, rice, milk and meat, to reduce the impact of the budget on those most vulnerable to rising inflation.

Fahad Rauf, head of research at Ismail Iqbal Securities, a local brokerage, was quoted as saying by news agency Reuters that the only silver lining of the finance bill was that it would take Pakistan a step closer to the IMF programme resumption.

"It's unfortunate that we only know how to increase indirect taxation, and burden the existing taxpayers." He added, "On the other hand, there is no income tax collection from retailers, real estate, and agriculture segments."