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Pakistan has reduced fuel subsidies in order to reduce its fiscal imbalance

Image: Reuters Berita 24 English -  Pakistan 's finance minister announced on Thursday that fuel subsidies will be cut for the second ti...

Image: Reuters

Berita 24 English -  Pakistan's finance minister announced on Thursday that fuel subsidies will be cut for the second time in a week in order to manage the fiscal deficit and secure bailout money from the International Monetary Fund (IMF).

Last week, Pakistan and the IMF reached an agreement on the continuation of the bailout program, with the lender emphasizing the importance of ending unpaid subsidies, which were costing the cash-strapped government billions per month.

Minister Miftah Ismail announced that starting on Friday, the price of petrol and gasoline at the pump will be hiked by 17 percent, or 30 Pakistani rupees per litre.

According to him, the new price for petrol will be 209.86 Pakistani rupees ($1.06) per litre, while diesel will be 204.15 rupees per litre. The country boosted prices by almost 20% last week.

The IMF and Pakistan had agreed to release over $900 million in money after Pakistan eliminated its gasoline subsidies, according to a Pakistani source personally involved in the Qatar talks.

On Thursday, Ismail said there was still a subsidy of roughly 9 Pakistani rupees per gallon.

The biggest issue between Pakistan and the IMF in reducing the fiscal deficit before the annual budget is tabled later this month has been the price hike.

In his final days in power, ousted Prime Minister Imran Khan gave the subsidy to calm public opinion in the face of double-digit inflation, a decision the IMF said went against the conditions of the 2019 accord.

In May, year-on-year CPI inflation reached 13.8 percent, the highest level in two and a half years. Following the removal of fuel and power subsidies, the country's central bank stated earlier this week that it expects inflation to remain high.

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