Pakistan raises fuel prices to meet IMF terms and as oil prices rise

ISLAMABAD, Aug 1 (Reuters) – Pakistan announced an increase in gasoline and diesel prices on Tuesday to better reflect rising international prices and boost revenue to meet International Monetary Fund (IMF) bailout targets ).

In a videotaped statement, Finance Minister Ishaq Dar said gasoline prices would rise by Pakistani rupees 19.95 to Pakistani rupees 272.95 ($0.952) per liter and diesel by Pakistani rupees 19.90 to 273 Rs.40 per litre, an increase of 7.8% for both fuels.

Fuel prices have risen sharply on world markets in the past 15 days, Dar said, adding that his government had tried to minimize the rise. Benchmark Brent crude prices rose 16% during July.

He said that the country was not in a position to deviate from the IMF stand-by arrangement It ended on June 30 after eight months of negotiations on tough fiscal discipline measures.

“Everyone knows that the international commitments we have with the IMF regarding the oil rate,” he said, adding that he could have announced a smaller increase if the commitments had not been there.

Islamabad committed to an oil tax of up to Rs 50 ($0.1745) per liter along with a series of painful measures, including raising additional revenue, raising energy prices and a market-based exchange rate. , which has already fueled historic inflation.

Dar did not say what the tax was in his statement on Tuesday, but said last month the government would try to keep it to around Rs 45 per litre.

The IMF has also called on Pakistan to maintain a tight monetary policy. The central bank on Monday, however, kept the policy rate stable at 22%and its governor said that the lender’s requirement of a strict policy did not necessarily mean raising the rate.

The oil price increases will have political implications for Dar’s coalition government just months before the general election. The South Asian nation of 220 million people already has an inflation rate of more than 29%.

Pakistan’s statistics office is expected to release inflation data for July later on Tuesday.

($1 = 286.7500 Pakistani rupees)

Reporting by Asif Shahzad; Edited by Kim Coghill, Jamie Freed, and Christian Schmollinger

Our standards: The Thomson Reuters Trust Principles.