The International Monetary Fund (IMF) has said that Pakistan government did not seek advice from the international lender before announcing its low-income groups’ petrol subsidies, Bloomberg reported on Tuesday.
IMF’s resident representative for Pakistan Esther Perez said the government’s idea to boost fuel costs for more affluent drivers to pay for a subsidy for those with lower incomes was not discussed with the IMF.
According to Esther Perez, the fund staff is looking for further information on the scheme’s operation, cost, targeting, safeguards against fraud and abuse, and mitigating measures. They will carefully address these aspects with the authorities.
A day earlier, the federal government declared that it would subsidize petrol up to Rs 100 for motorcycle riders and owners of automobiles up to 800 cc in order to lessen the impact of rising fuel prices on people who are already suffering from inflation.
Minister of State for Petroleum Dr Musadik Malik informed journalists in Lahore that Prime Minister Shehbaz Sharif had ordered that low-income individuals receive gasoline subsidies of up to Rs 100 per liter.
A 50 rupee per liter subsidy was previously established.
According to the minister, a comprehensive approach will make subsidized gasoline available to motorcyclists and owners of cars with engines up to 800 cc.
Malik added that owners of automobiles with engines larger than 800 cc would be paid in full.
He added that the government would lower the price of gasoline for the poor within six weeks of making the decision to offer fuel at discounted rates.
“The cost of gasoline will increase for owners of large automobiles. The price of gasoline will differ by Rs 100 between the rich and the poor. We support the needy Pakistan, where 210 million of its 220 million people live in poverty,” he added.
He further stated that the gas rate decision went into effect on January 1st. We have different tariffs for the wealthy and the poor.
This does not seem to be a subsidy that IMF ought to be concerned albeit it’s representative said earlier to rob the rich to feed the poor of Pakistan. Plan seems to be charge a surcharge for larger capacity cars to pay for subsidies to smaller vehicle users. Inference being don’t keep or use big cars,