Cash-strapped Pakistan hikes fuel prices by a whopping Rs 35

Citizens of cash-strapped Pakistan received yet another jolt on Sunday when the country's government raised prices of petrol and diesel by Rs 35 each.

Making the announcement in a televised address on Sunday morning, Finance Minister Ishaq Dar said, "We have decided to increase the price of petrol and diesel by Rs 35 each. Light diesel and kerosene prices have been hiked by Rs 18 each. The new fuel rates come into effect immediately." To note, in the past, the fuel prices were adjusted fortnightly, from the first to the sixteenth of every month.

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Following the sharp increase in prices, petrol now stands at Rs 249.80 per litre while high-speed diesel costs Rs 262.80 per litre, kerosene oil at Rs 189.83, and light diesel oil at Rs 187 per litre.

Long queues of motorists were seen at the filling stations ahead of the price hike. Dar said that the government had received reports of artificial shortages in the market, which had triggered speculation on social media with regard to a Rs 50 increase in the prices of petrol and diesel. 

Dar contended that the government had not increased the price of petrol since October last year until January 29 and also decreased the prices of diesel and kerosene oil.

"We are now seeing an 11 per cent increase in the prices of petroleum products in the international market," he said.

The Pakistani rupee saw devaluation last week. Cash-strapped Pakistan's currency depreciated to its lowest against the US dollar on Friday in the interbank and open market and closed at Rs 262.6. 

Last week, Prime Minister Shehbaz Sharif said that the ruling alliance was ready to swallow the bitter pill of the International Monetary Fund's 'stringent' conditions to revive the loan programme.

Pakistan entered a $6 billion IMF programme during Imran Khan's government in 2019, which was increased to $7 billion last year. At present, the programme's ninth review is pending, with dialogue continuing between the Pakistan government and IMF officials for the release of $1.18 billion.

From January 31 till February 9, the IMF team would be in Islamabad to hold dialogue with Pakistani officials over the implementation of the conditions attached to the assistance package.

Commenting on the price hike, Fahad Raud, head of equities at Ismail Iqbal Securities, said the government decision was expected. Stating that the latest hike did not incorporate recent exchange rate depreciation, he further warned of more increases around mid-February.

Pakistan is facing the worst economic crisis as its reserves have dropped to a critical level of $3.7 billion and need urgent support to avoid default. The IMF is the only forum that can save the country. But many people wonder about the future of the country without any long-term planning in sight to tackle similar economic situations.

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• pakistan economic crisis