Pakistan slashes fuel subsidies in bid to control fiscal deficit – finance minister

Pakistan slashes fuel subsidies in bid to control fiscal deficit – finance minister

KARACHI, Pakistan - Pakistan will slash fuel subsidies for a second time in a week in a bid to control the fiscal deficit and secure International Monetary Fund (IMF) bailout money, the finance minister said on Thursday.

Pakistan and the IMF concluded negotiations last week on the resumption of the bailout programme, following which the lender stressed the need to end unfunded subsidies which were costing the cash-strapped country billions per month.

Minister Miftah Ismail said petrol and diesel prices for consumers have been increased by 17% at the pumps starting on Friday, up 30 Pakistani rupees each per litre.

The new price for petrol will be 209.86 Pakistani rupees ($1.06) per litre and diesel 204.15 per litre, he said. Last week, the country raised prices by around 20%.

According to a Pakistani source directly involved in talks in Qatar, the IMF and Islamabad had reached a deal to release over $900 million in funds once Pakistan removed the fuel subsidies.

Ismail said on Thursday there now remained a subsidy of about 9 Pakistani rupees per litre.

The price hike has been the main issue between Pakistan and the IMF to reduce the fiscal deficit before the annual budget is presented later this month.

Ousted Prime Minister