The decision comes amid stalled negotiations with global lender IMF which is yet to release a crucial instalment of $1.1bn.
Pakistan has hiked up petrol and diesel prices after the country’s currency value plummeted this week and just days before an International Monetary Fund (IMF) visit to the country to discuss the stalled ninth review of Pakistan’s funding programme.
Finance minister Ishaq Dar said at a press conference on Sunday that petrol price will rise by 35 rupees to 249.80 rupees ($1) per litre while high-speed diesel would go up to 262.8 rupees ($1.05) per litre.
The announcement was made just 10 minutes before the new prices went into effect at 11am (05:00 GMT).
Govt announced new prices of Petroleum Products with effect from 11.00 hrs, 29 Jan ,2023.
High Speed Diesel-Rs 262.80 per litre
MS Petrol —Rs 249.80 per litre
Kerosene Oil -Rs 189.83 per litre
Light Diesel Oil – Rs 187 per litre
— Ministry of Finance (@FinMinistryPak) January 29, 2023
“We will have to take the rise in international oil prices and the devaluation of the rupee into account,” Dar said. “This rise is being done immediately on the recommendation of the oil and gas regulatory authority who said there were reports of artificial shortages and hoarding of fuel in anticipation of price rises – hence this price rise is being done immediately to combat this.”
Long lines were reported outside petrol stations after people filled their tanks ahead of the announcement.
Reaction to Dar’s announcement was met with swift condemnation and criticism of the government’s handling of the country’s economic situation.
“How will poor survive? Why [is] this nation so insensitive about simple question of life of poor and middle classes,” Shabbar Zaidi, the former chairman of Pakistan’s Federal Bureau of Revenue, posted on Twitter.
Increase of Rs 35 in petroleum. Inflationary spiral. How poor will survive? Why this nation is so insensitive about simple question of life of poor & middle classes. When this had to done then why so late? Pakistan not workable in the present economic paradigm. Rescue
— SyedShabbarZaidi (@SShabbarZaidi) January 29, 2023
Zartaj Rathore, a Lahore resident, said on Twitter: “Sadly this inflation will get the life of people. They’re [the government officials] not cutting their luxury expenditures all the burden and hurdles will always for the people who are paying huge taxes.”
Petrol, Diesel prices in Pakistan increased by Rs 35 per litre. Sadly this inflation will get the life of people. They’re not cutting their luxury expenditures all the burden and hurdles will always for the people who are paying huge taxes. pic.twitter.com/1fUYe2qmJI
— Zartaj Rathore (@RathoreZartaj) January 29, 2023
Pakistan is in the midst of a balance of payments crisis amid the plummeting value of the rupee – which dove to a historic low after losing nearly 12 percent of its value against the US dollar earlier this week after an exchange cap was lifted.
The cash-strapped country is seeking to unlock a vital bailout from the IMF. However, the Washington-based lender has yet to approve the release of the crucial instalment of $1.1bn, originally due to be disbursed in November last year as part of a $6bn bailout package that was secured in 2019.
A successful IMF visit is critical for Pakistan, which is facing an increasingly acute balance of payments crisis and is desperate to secure external financing, with less than three weeks’ worth of import cover in its foreign exchange reserves.
Pakistan also suffered from a nationwide electricity outage earlier this week, linked to a cost-cutting measure, estimated to have cost the textile industry alone $70m.