Jan 29 (Reuters) – Pakistan’s finance ministry said on Sunday that petrol and diesel prices would rise by 35 rupees ($0.1400) a liter after the country’s currency plunged this week when price caps were removed.
The decision comes days before an International Monetary Fund mission visits Pakistan later this month to discuss the stalled ninth review of the country’s current financing program.
Last week, Pakistan’s rupee lost nearly 12% of its value following the removal of price caps imposed by the government but opposed by the IMF.
Pakistan finance Minister Ishaq Dar
Finance Minister Ishaq Dar said at a press conference on Sunday that he hoped the announcement would dispel speculation on social media about higher prices or that petrol supplies would run out. He said the increase was recommended by the oil and gas authorities due to the higher cost of buying power in the global market.
“We will have to take into account the rise in international oil prices and the devaluation of the rupee,” he said.
“This increase is being made immediately on the advice of the Oil and Gas Regulatory Authority. Who said there were reports of artificial shortages and hoarding of fuel in anticipation of price increases – therefore this price increase is being made immediately to prevent this from happening.”
A day earlier, Reuters witnesses said some gas stations had long lines outside as residents filled their tanks amid speculation that prices would soon rise.
Pakistan is in the midst of a balance of payments crisis. The plummeting value of the Pakistani rupee will push up the prices of imported goods. Energy forms a large part of Pakistan’s import bill.
A successful IMF visit is crucial for Pakistan. Which is facing an increasingly acute balance of payments crisis and is desperate to secure external financing. With less than three weeks’ worth of imports in its foreign reserves.