ISLAMABAD: The International Monetary Fund (IMF) expressed concerns about the government’s recent fuel subsidy proposal, announced by Prime Minister Shehbaz Sharif on Sunday, which includes a subsidy of Rs100 a litre for the nation’s low-income segment.
According to the deputy minister for petroleum, Musadik Malik, the government will raise fuel prices for wealthier motorists to fund a direct petrol subsidy for lower-income groups.
Consumers using small vehicles including motorcycles and rickshaws will be given a subsidy of Rs100 a litre, Malik told a news briefing on Monday. The government earlier said the subsidy would be set at as much as Rs50 a litre, while it continues to negotiate with the lender to revive a $6.5 billion bailout
The lender’s resident representative, Esther Perez Ruiz, said the authorities did not consult with the IMF before announcing the scheme. Ruiz highlighted the IMF requires more details about the subsidy’s operation, cost, targeting, protections against fraud and abuse, and offsetting measures.
The lender instead advocated for scaling up social protection for the most vulnerable.
Ruiz reiterated that the IMF views strengthening support for those eligible for social assistance through unconditional cash transfer schemes as the most direct way to assist the neediest in Pakistan.
The announcement of the fuel subsidy could potentially delay the staff-level agreement between Pakistan and the IMF, as the government remains engaged in discussions with the lender over the stalled bailout programme.
