How much relief is coming in petrol for Pakistanis? Prime Minister Shehbaz gave an indication to give subsidy to IMF.

New York – A fuel relief package for Pakistanis could be closer to implementation as Prime Minister Shahbaz Sharif said the IMF had no objection to the government’s target of Rs 100 per liter petrol subsidy.

The announcement comes as petrol prices hover around Rs 390 per liter in the South Asian country, putting severe pressure on commuters, laborers and small car owners who are already struggling with rising household and transport costs.

The government is not cutting petrol prices by Rs 100 per liter for everyone as the proposed relief is specifically aimed at bikers and small engine cars. For those who depend on motorcycles and rickshaws for commuting or earning a living, this assistance can save some money every month.

The announcement is important because Pakistan is under an IMF-supported economic program, and the government needs to provide relief to vulnerable consumers while at the same time protecting public finances and meeting its fiscal commitments.

Fuel subsidies have historically created problems for Pakistan because broad-based subsidies can be extremely expensive. Universal subsidies can increase government spending, undermine revenue collection and interfere with market-based fuel pricing.

The current approach tries to avoid these problems by limiting aid to specific consumers and capping fuel subsidies. Prime Minister Shahbaz Sharif’s message is that the IMF has accepted this targeted approach without any objection.

Behind the subsidy debate is another major issue, the Petroleum Development Levy. The levy is one of the main sources of revenue for the federal government, with petroleum-related revenue targets in the trillions of rupees.

Therefore, Pakistan cannot reduce or eliminate the levy without consequences for its budget and IMF commitments.

The government has earlier adjusted the petroleum levy rate and introduced temporary relief measures during a sharp rise in international oil prices. But the broader expectation is that domestic fuel prices should respond to international market movements rather than being permanently frozen by government subsidies.

The program can come with a substantial financial cost. Earlier estimates put the potential impact of a fully operational targeted subsidy at around Rs 24-25 billion per month.

The government cannot fully protect consumers from shocks in the international oil market. Pakistan is highly dependent on imported petroleum, meaning that international crude oil prices, geopolitical tensions and disruptions in global energy markets can rapidly affect domestic fuel prices.

When global prices rise, pressure on Pakistan’s pump prices increases. When they fall, consumers can potentially benefit from lower house prices, subject to the government’s tax and levy structure.

Therefore, the targeted subsidy does not remove Pakistan’s exposure to international oil prices. Instead, it seeks to minimize the impact on selected users.

Shahbaz Sharif’s announcement may bring some relief to millions of small car users, but it should not be mistaken for a drop in petrol prices across the country.

In Pakistan, the price of petrol reached Rs 392, diesel reached Rs 408.53.

The post How much petrol relief is coming for Pakistanis? Prime Minister Shehbaz has indicated to give subsidy to IMF appeared first on Daily Pakistan Punjabi News.

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