Pakistan’s petrol prices are likely to increase as the International Monetary Fund (IMF) urges the government to implement new taxes on petroleum products.
The IMF has reportedly suggested a General Sales Tax (GST) on petroleum products, along with a significant hike in the Petroleum Development Levy (PDL) up to Rs70 per liter. Local media sources indicate that these measures are being considered as part of Pakistan’s ongoing negotiations with the IMF, aiming to stabilize the country’s financial situation amid fiscal challenges.
This potential increase in fuel costs follows the IMF’s recent approval of a $7 billion loan for Pakistan, a package that includes specific economic reforms. One of the primary conditions of this agreement is the implementation of new tax policies, designed to help the government achieve ambitious revenue targets. Currently, petroleum products in Pakistan are exempt from GST, but this status may soon change.
Expected Impact on Petrol Prices in Pakistan
If the GST on petrol and the increase in PDL are implemented, fuel prices are expected to climb significantly in the coming weeks. Although exact figures have yet to be released, financial experts predict that even a small addition to GST or PDL would lead to noticeable changes in retail prices, affecting millions of consumers and industries across the country.
IMF’s Visit and Financial Targets
The IMF delegation’s recent visit aimed to review Pakistan’s economic performance for the first quarter of the fiscal year, with a particular focus on whether revenue collection and spending align with IMF targets. Analysts believe that the current coalition-led government may face challenges in meeting these fiscal targets, especially given the potential impact of rising fuel costs on inflation and public sentiment.
A Potential Price Hike on the Horizon
The expected petrol price increase in Pakistan comes at a time when the government is under pressure to stabilize the economy. While official confirmation of these changes is pending, the likelihood of rising fuel costs has already sparked concern among the public.
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