IMF’s Role in The increase of Petrol Price in Pakistan
IMF (International Monetary Fund) an international financial organization known to support economic policies and encourage financial stability in countries around the globe. This done by granting loans to countries that require capital to stabilize their economy. As Pakistanis are aware Pakistan has been going through an economic crisis. This Is because of political unrest in the country.
There is severe political unrest in the country due to no proper establishment of the government. Lastly, the government of Prime Minister Imran Khan overthrown and the government of Shahbaz Sharif placed. Due to some corruption in the government, the treasury used rigorously. As the treasury emptied the country running out of funds.
The government requested the IMF (International Monetary Fund) to grant Pakistan a loan. Upon request, IMF suggested increasing Petrol Price In Pakistan up to 270 Pkr. This proves that the IMF plays a major role in the increase of Petrol price in Pakistan.
Considering The Decision to Increase Petrol Prices
According to public opinions, some were in favor of the decision to increase the Petrol Price in Pakistan. They defended their opinion by saying “The government is taking necessary actions that are very necessary at this moment. Else Pakistan could have ended up like Sri Lanka”. Referring to Sri Lanka, corruption in the government caused the treasury to finish and the country eventually crashed.
The decision to increase Petrol price was critical as this would help ease markets and help Pakistan get out of the financial crisis. However, some citizens are also against this decision. They defend their opinion by sympathizing with the lower class. Anonymous said,” If Petrol Price in Pakistan is hiking why are market prices of products not decreasing instead they are on the rise too”.
Subsidy on Petrol Price in Pakistan
The Government of Pakistan has proposed a decision to give subsidies on Petrol Price in Pakistan. This decision has not yet come into practice which is unethical of the government. The subsidy will be given to the lower class, mainly those who own bikes. This subsidy will not be available for citizens with proper cars whether it be a car of 800cc or less.
The subsidy is estimated to be around Rs47 per liter. The subsidy is still too less as Petrol Price in Pakistan is still climbing. Even after providing a subsidy on petrol, the government has started increasing sales tax on petrol. Lastly, the government has now decided to remove any type of subsidy on petroleum products and instead charge more.
They have removed every subsidy whether it be petrol or diesel. Some say this was a necessary decision to prevent Pakistan’s economy from totally crashing. Whereas some are still revolting against this decision as their wages and salaries remain low.
Comparing Petrol Prices in Pakistan to Worldwide Prices
A war had recently broken out between Russia and Ukraine. As most are aware that Ukraine is one of the sole suppliers of crude oil. As war broke out in Ukraine, the country’s administration pushed up its oil prices. This caused oil prices to increase around the globe as well as in Pakistan.
This is also because the dollar’s price increased and crude oil’s price is determined by the dollar’s exchange rate. Hence, as the dollar’s exchange rate increases, the price of crude oil also increases. This is also one of the major reasons for the increase in Petrol Price in Pakistan. Almost every country that imports oil from foreign countries is suffering from this price hike.
This price hike is not expected to go away until the unrest and war settle down in Ukraine. Countries like Saudi Arabia and Iran are still using oil cheaply as they have reserves and potential for mining oil. Pakistan also has huge reserves of oil in Balochistan and in its deep-sea ports. The potential to mine oil in Pakistan remains unexploited hence causing a loss to the government.