Government set to increase Petrol, Electricity prices

November 25, 2021

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The federal government has hinted at an increase in the Petroleum Development Levy by of 4 rupees per liter per month and an increase in electricity tariffs to meet the preconditions set by the International Monetary Fund (IMF) to complete the sixth Review under the $ 6 Billion Expanded Funding Facility.

In this regard, PM Advisor on Finance Shaukat Tarin said on Monday at a press conference with Federal Energy Minister Hammad Azhar that the PDL should be increased by 4 rupees a month to 30 rupees per liter to reach the reduced target of Rs 310 billion which was previously set at Rs 610 billion.

The report said there was an agreement between the MoF and IMF Staff to resume the $ 6 billion funding program, which has been suspended since April this year. He also said that the World Bank as well as the Asian Development Bank (ADB) will provide funds after approval by the IMF Board.

“However, Pakistan needs to take five key precautions, including accepting SBP Autonomy and proposals for lifting tax subsidies ahead of a IMG Governing Body meeting scheduled for January 12, 2022,” he said.

In this regard, he said that the government and the International Monetary Fund have agreed on the SBP autonomy project and that the government will give the central bank independence in making decisions related to monetary and exchange rate policy.

However, he made it clear that the central bank will be accountable to parliament, like other organizations such as the National Bureau of Accountability (NAB), and that all NAB laws will apply to the SBP.

The Advisor said the government has also revised its fiscal year (FY22) revenue target to Rs 6.1 trillion from Rs 5.8 trillion.

It should be noted that the International Monetary Fund has asked Pakistan to introduce additional taxes to the tune of Rs 700 billion or remove tax exemptions of same amount by March. The adviser said the government has so far withdrawn the Rs 350 billion tax exemption and another Rs 350 billion in sales tax exemptions will be withdrawn soon.

The Advisor also said the government has also cut the Public Sector Development Program (PSDP) from Rs 900 million to Rs 700 million and has decided to cut grants by 50 billion after the deal.