World News: Pakistan’s new govt may have to roll back fuel, power subsidies – Gulf Digital News

World News: Pakistan’s new govt may have to roll back fuel, power subsidies – Gulf Digital News

Pakistan's new government led by Prime Minister Shehbaz Sharif is in internal discussions on whether to roll back fuel and power subsidies that have blown a hole in public finances amid a stuttering economy, officials said.

Former premier Imran Khan, who was ousted in a confidence vote earlier this week, announced a cut in petrol and electricity prices in February despite soaring global prices in a bid to win back popular support. read more

But that relief measure, estimated at 373 billion Pakistani rupees ($2.06 billion), has stretched government finances in a way that cannot be sustained, the finance ministry's top civil servant said. It has also endangered an ongoing International Monetary Fund rescue programme.

"The relief package will add to the fiscal deficit which we cannot afford at the moment," Finance Secretary Hamed Yaqoob Sheikh told Reuters.

"Either it has to be rolled back or compensating reductions in other expenditures would be required to ensure that the primary balance agreed with the IMF is achieved."

The primary budget balance excludes debt repayment obligations.

The fiscal deficit could go as high as 10% of gross domestic product, according to Sharif's top economic adviser Miftah Ismail, widely expected to be named finance minister.

Sharif met his economic team