Pakistan aims to address concerns from the International Monetary Fund before implementing its new fuel subsidy plan.
The IMF had some reservations about the government’s plan to raise fuel prices for wealthier motorists to finance a subsidy for lower-income people, Pakistan Petroleum Minister Musadik Malik said on Bloomberg TV in an interview. The measures aim to help protect the poor and vulnerable.
“We originally thought that it was a much simpler idea,” he said. “We want to make sure now that if we move forward, we take care of their concerns and make sure that they completely understand what we are trying to do and why.
The government is still trying to meet IMF conditions to revive a stalled $6.5 billion bailout package, key to avoiding a default. The government has raised taxes and energy prices and allowed the currency to depreciate to meet some of them.
This is not the first time petrol price subsidies have been a sticking point for the IMF, as measures by the previous government stalled the program last year. Pakistan’s Finance Minister Ishaq Dar said in April that the fuel subsidy plans had been shared with the fund.
Malik is confident that the government can provide some relief to the public that will help boost its popularity ahead of national elections later this year. Pakistan will also finalize a plan to clear debt in energy companies in two months with equity swaps and dividend payouts some of the options, Malik said.
This week’s Emerging Markets Week Ahead column did a deep dive into the potential shifts in the political landscape of emerging markets this year that are putting investors on edge.
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