IMF Objects to Proposed Petrol Subsidy Scheme

The International Monetary Fund (IMF) has rejected Pakistan’s initial proposal for subsidizing petrol for low-income segments of the population. Local media reported today that the IMF has objected to the government’s scheme of cheap petrol for motorcycles and vehicles up to 800cc. The lender is skeptical about how much funding will be needed for this scheme, where the money will come from, the number of consumers, and the expected losses in exchange for the subsidy. The IMF has requested a comprehensive plan in this regard from the government. Pakistan and the IMF held virtual talks recently in which the lender insisted on developing an improved petrol subsidy plan while continuing to push for more effective and targeted subsidies, in general, for the poor. Contrary to the aforesaid reports, it is pertinent to note that Minister of State for Finance and Revenue Aisha Ghaus Pasha informed the Senate Standing Committee on Finance and Revenue today that the relief package for petroleum users hasn’t been discussed with the IMF so far. Prime Minister Shehbaz Sharif recently announced a relief package for the poor under which a subsidy of will be given to them on every liter of petrol, to be charged from consumers who do not fall under the eligibility criteria of the scheme. However, the government is yet to announce any further details of the proposed subsidy.