Pakistan raises fuel prices to meet key condition for IMF bailout

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Pakistan raises fuel prices to meet key condition for IMF bailout

Pakistan raised the cost of gasoline and diesel by 30 rupees a liter each, Finance Minister Miftah Ismail said in a Twitter post

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Pakistan  | Fuel prices | IMF

Agencies 

Last Updated at May 28, 2022 01:36 IST

Pakistan’s government increased local fuel prices from Friday to meet a key condition set by the International Monetary Fund for reviving its bailout program after talks with the multilateral lender ended inconclusively the day before. Markets gained.

Pakistan raised the cost of gasoline and diesel by 30 rupees a liter each, Finance Minister Miftah Ismail said in a Twitter post. The decision comes a day after the two sides ended week-long talks without reaching an agreement to revive the stalled loan.

Imran Khan said in a series of tweets that the fuel price hike was the highest in the country’s history and Pakistan’s government hasn’t pursued a deal with Russia for 30% cheaper oil.

The government was already mulling gas import deals with several countries, including Russia.

Prime Minister Shehbaz Sharif said parliament will decide the next election timeline in a speech to the lower house. Ousted premier Imran Khan repeated demands for the government to call for fresh elections in six days, failing which he will return to Islamabad to stage a sit-in with two million people, which he later called off.

Khan on Friday dismissed reports that he struck a deal with the Pakistan Army to end his massive “Azadi rally” demanding fresh general elections, asserting that he had decided to end his march to avoid bloodshed.

Pakistan’s rupee, stocks and dollar bonds rose after the country got closer to reviving its bailout from the International Monetary Fund after raising fuel prices, a key condition.

The nation’s rupee rose 0.7 per cent to 200.5 a dollar in intraday, according to Arif Habib’s foreign exchange desk.

Pakistan faces $6.4 billion in dollar debt due over the next three years as Prime Minister Shehbaz Sharif’s new government is trying to meet bailout terms set by the International Monetary Fund.

The country, under pressure to keep its economy afloat and avert a sovereign default, needs about $3.16 billion to pay dollar bonds and loans this year, $1.52 billion next year and $1.71 billion in 2024, according to data compiled by Bloomberg.

With a $45 billion trade deficit in the current fiscal year to June Pakistan faces the prospect of default for the second time in its history.

Forex reserves drops to $10.1 bn

Pakistan’s foreign exchange reserves decreased by $75 million to $10.1 billion in the week ended May 20, according to a central bank statement.

The nation’s reserves have dropped to cover less than two months of imports.

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