The International Monetary Fund has urged Pakistan to remove distortions in petroleum prices as soon as possible. The demand comes despite the Fund’s prior understanding of a temporary subsidy introduced by the government.
Pakistan had announced a Rs152 billion fuel subsidy to protect consumers. This step was taken after global oil prices surged due to tensions in the Middle East and disruptions near the Strait of Hormuz.
Officials said the agreement between Pakistan and the IMF remains unchanged. However, the Fund is not in favor of broad, across-the-board subsidies. It wants the government to move toward a more balanced and targeted pricing system.
Finance Minister Muhammad Aurangzeb and his team will brief IMF officials soon. The update will include how provinces are contributing to the subsidy burden. The discussion will take place during upcoming meetings with the World Bank.
The IMF is particularly concerned about diesel pricing. Currently, the petroleum levy on diesel is zero. In contrast, petrol carries a much higher levy. This imbalance has created pressure on government revenues.
The situation became more difficult after the government reduced petrol prices sharply. This decision reduced the financial cushion created by higher petrol taxes.
Petrol consumption in Pakistan is currently higher than diesel. However, diesel demand is expected to rise during the harvest season. This could further complicate the pricing structure.
Officials said subsidy-related payments to oil companies had crossed Rs129 billion. These payments have now slowed after recent price adjustments. The government is releasing funds with partial retention to ensure proper verification.
Pakistan has enough fuel reserves for several weeks. Additional shipments of petrol and diesel are also on the way. Still, rising import costs are increasing pressure on the country’s external finances.
Meanwhile, the Oil and Gas Regulatory Authority has introduced stricter checks. These include audits and verification systems to manage industry claims more transparently.
