Pakistan drops ‘petrol bomb’ on its citizens

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ISLAMABAD: People in Pakistan woke up on Thursday to the news of a historic price hike in the prices of petrol and gas as the government tried to appease the IMF for unlocking the critical loan tranche for the cash-strapped country.

The “petrol bomb”, as the price hike is termed these days, was dropped around Wednesday midnight, hours after the government unveiled a supplementary finance bill before parliament, proposing to raise the goods and services tax (GST) to 18% from 17% to help raise Rs 170 billion ($639. 7 million) in extra revenue during the fiscal year ending in July. The rise in the price of petroleum products was one of the preconditions of the lender.

The price of petrol was hiked to Rs 272 per litre after an increase of Rs 22. 2, a press release from the finance division read on Wednesday night, noting that the surge has taken place due to the rupee’s devaluation against the dollar. The price of the high-speed diesel (HSD) was hiked by Rs 17. 2, kerosene by Rs 12. 9 and light dieRs 9. 7. The new price of HSD will cost Rs 280 per litre. KeroRs 202. 7 whereas LDO will be sold at about Rs 196. 7 per litre.

Increase in price is due to Pakistani rupee devaluation applicable for the calculation of current pricing period,” the press release said, adding that the prices would be effective from February 16. The increase came as finance minister Ishaq Dar presented the money bill in parliament to fulfil the International Monetary Fund’s demand to increase revenue before it releases $1. 1 billion out of the $7 billion loans.

The country is locked in negotiations with IMF for the release of bailout funds, and with about enough reserves to meet only three weeks of imports, Pakistan is looking to increase revenue despite multi-decade high inflation of 27%. The ‘mini-budget’ also proposed to raise taxes on luxury items to 25%, while hikes in taxes on firstand business-class air travel, cigarettes and sugary drinks were also proposed.