Pakistan government drops another inflation bomb on masses; petrol up by Rs 22.20 per litre

Islamabad:  The Pakistan government under Prime Minister Shehbaz Sharif dropped another bomb of inflation on the masses on Thursday as it jacked up petrol price by Rs 22.20 per litre and increasing gas price by at least 124 per cent, plunging the already inflation-hit people into further stress and struggle.

As per the latest notification issued by the government effective from Thursday, the prices of petroleum products were revised as follows:

MS (petrol) revised to Rs 272.00 a litre, high-speed Diesel (HSD) price revised to 280.00 litre, kerosene oil (SKO) price revised from Rs 189.93 to Rs 202.73 and light diesel oil revised from Rs 187.00 to Rs 196.68, all effective from Thursday.

The decision came weeks after the government increased prices of petroleum products by Rs 35, a decision undertaken two days before the scheduled revision of prices.

Sources in the Finance Ministry said that the decision has been taken to manage the depreciation of Pakistani rupee against the US dollar, since an artificial cap on the local currency was removed and the rupee value was allowed to decide its value as per the market-based currency exchange rate.

Moreover, the government has also jacked up sale prices of gas on the advice of the Oil and Gas Regulatory Authority (OGRA), increasing the gas sale price from 16.6 per cent to at least 124 per cent for categories of consumers of the Sui Northern Gas Pipelines Limited (SNGPL) and the Sui Southern Gas Company (SSGC).

To add more to the misery of the locals, the revised prices of gas have been put to effect from January 1, 2023, leaving the masses shell-shocked and clueless as to how the latest inflation bomb will further damage their lives.

The Pakistan government is forced to take these decisions as it continues to engage with the International Monetary Fund (IMF) in a desperate effort to get its ninth review of the IMF EFF (Extended Funding Facility) approved and release of $1.1 billion, for which IMF has demanded implementation of tough pre-conditions if Islamabad wants to revive the IMF programme.

Pakistan is currently at the lowest level in terms of its foreign exchange reserves, which stand at just over $2 billion, enough to meet only three weeks of imports.

Finance Minister Ishaq Dar had earlier expressed his anger at the IMF for not approving Pakistan’s ninth review and had stated that if the IMF team does not visit Pakistan, he doesn’t not care, adding that Pakistan would handle the situation from elsewhere.

However, with all other countries, including China, linking their financial support to Pakistan with the revival of the IMF programme, Pakistan is left with no other option but to nod to all the tough demands of the IMF, which include multi-decade high inflation of at least 27 per cent and rising.

As virtual talks with the IMF team continue, Pakistan government has also laid a supplementary finance bill aka ‘mini-budget’ before the Parliament for debate and approval, proposing to raise the goods and services taxes (GST) from 17 per cent to 18 per cent, which Dar said would help raise at least Rs 170 billion in extra revenues during the current fiscal year ending July.

The finance bill also proposes increase in taxes on luxury items to at least 25 per cent. Moreover, it also proposes price hike for air travel, cigarettes and sugary drinks etc., which has been widely questioned and criticised by the coalition partners of the government and the opposition benches.

But analysts say that Pakistan has no other option but to accept all the demands of the IMF and revive the funding programme to save the country from bankruptcy, which under the current situation seems eminent.