The government has informed the International Monetary Fund (IMF) that it would not implement a fuel subsidy program as the two parties discuss a country’s long-delayed $1.1 billion bailout, Bloomberg News reported on Thursday.
The IMF has also said that it would “continue engagement with the government on the loan despite the ramp-up in political tensions”. The remarks came after the arrest of PTI chief Imran Khan on Tuesday sparked violent protests across the country.
Regarding fuel subsidies, Prime Minister Shehbaz Sharif suggested in March that wealthy consumers pay more for petrol, with the extra revenue going towards lowering costs for the poor who have been hit particularly hard by inflation.
However, the government has now committed not to implement the cross-subsidy program in the current fiscal year and beyond, an IMF spokesperson reportedly told Bloomberg.
Additionally, the lender said that the government would maintain a market-based exchange rate for the rupee currency and refrain from enacting any new tax exemptions.
The change occurred a day after Musadik Malik, the minister of state for petroleum, stated that the government intended to allay IMF worries before implementing its new gasoline subsidy scheme.
Meanwhile, in a scheduled press conference on Thursday, the IMF said Pakistan needed significant additional financing to successfully complete the long-stalled ninth review of the IMF’s bailout package, Reuters reported.
