New fuel pricing scheme needs to be agreed before IMF deal

After a few outstanding issues, such as the proposed fuel pricing plan, are resolved, a long-awaited loan deal with the International Monetary Fund (IMF) will be inked, an IMF official said on Friday.

An accord that would provide $1.1 billion to the cash-strapped, nuclear-armed nation of 220 million people has been the subject of negotiations since early February.

The most recent issue is a plan to increase fuel prices for wealthy consumers, which Prime Minister Shehbaz Sharif unveiled last week. The money raised will be used to subsidise prices for the poor, who have been severely impacted by inflation, which in February was at its highest level in 50 years.

Musadik Malik, the minister in charge of petroleum, said to Reuters on Thursday that his department had been given six weeks to develop the pricing strategy. According to him, it wouldn’t be a subsidy but rather a programme of assistance for the underprivileged.

Esther Perez Ruiz, the resident representative of the IMF in Pakistan, asserted that the government had not consulted the fund regarding the fuel pricing plan.

A staff-level agreement will be signed when a few outstanding issues, including the fuel scheme, were resolved, according to Ruiz in a message to Reuters.

A request for comment was not immediately answered by the finance or petroleum ministries.

A request for comment was not immediately answered by the finance or petroleum ministries.

Pakistan, which barely has enough foreign reserves to last for approximately four weeks of imports, is pleading with the IMF to release a $1.1 billion tranche from a $6.5 billion bailout agreed upon in 2019.

According to Ruiz, the fund will ask the administration for further information regarding the fuel idea, including how it will be put into practise and what safeguards will be put in place to prevent exploitation.

As a condition for the agreement, Islamabad has implemented a number of fiscal measures, including devaluing the rupee, eliminating subsidies, and raising energy prices. The finance minister said this month that the agreement was “very close.”