Cut in petrol prices

Under immense pressure to provide relief to the masses reeling from a backbreaking price hike, the government has made a considerable decrease in the prices of petrol and diesel for this fortnight. Going cheaper by Rs10 and Rs7.5, petrol and diesel will now be available at Rs214.8 and Rs227.80 per litre respectively – still much higher than Rs150 or thereabouts that was being charged for a litre of the two petroleum products when the PDM coalition government took over from the PTI in April this year.

The cut in petrol prices comes at a time when negotiations with the IMF on the ninth review of $7 billion Extended Fund Facility are underway, and the government is reportedly under pressure to impose additional taxes to the tune of Rs800 billion. While at stake is a mere $500 million tranche, the country – suffering from a serious balance-of-payments crisis and running the risk of default – cannot afford to send out a wrong signal in the form of a halt in the IMF programme. After all, government’s expectation of an additional assistance of $4.2 billion from Saudi Arabia as well as a $3 billion rollover by the UAE hinges on the continuation of the IMF loan programme.

Finance Minister Ishaq Dar has, during a recent TV interview, insisted that the government policy now is to make no raise in the prices of petroleum products. One wonders how he is going to pursue the said policy given the reports that the IMF wants the government to apply general sales tax to the petroleum prices – a core demand that has been long overdue. The PMLN-led coalition government – which has already burnt much of its political capital, evident from the sweeping PTI victories in the recent bye-elections across the country – is indeed caught between the devil and the deep.

Published in The Express Tribune, December 17^th, 2022.

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