The First Major Decision of the Caretaker Government Is to Raise Gas Prices.
Anwaar-ul-Haq Kakar, Pakistan’s caretaker prime minister, increased the price of gasoline by more than Rs17 per litre on Tuesday night, a significant policy shift. There has been a lot of talk regarding the effects of this decision on the economy and the people of the country. Here’s a thorough breakdown of the situation:
The New Administration Will Raise Gas Prices
The Caretaker Prime Minister’s government has significantly raised the price of gasoline by nearly Rs17 per litre. Rising global prices for petroleum have prompted this move, as they will have an effect on local retail pricing.
Second Ministry of Finance Justification and Explanation
When announcing the hike, Pakistan’s Finance Ministry said that rising oil prices abroad were the primary factor in the decision to raise consumer prices across the country. This argument is an attempt to bring domestic prices in line with those of the international market.
Reasons for the Cost Increase
As of August 1st, the current price of gasoline is Rs272.95 a litre.
On August 16th, the price of a litre of gasoline increased to Rs290.45.
Price increase of Rs.17.50 per litre
Diesel Impact at High Speed Petrol isn’t the only fuel whose price has gone up recently. There was also an increase in the cost of high-octane diesel: As of August 1st, the going rate for high-speed diesel is Rs273.40 a litre. On August 16th, the price of a litre of high-speed diesel increased to Rs293.40.
Increase of 20 rupees per litre
The History of Gasoline Price Hikes
During their time in power, the Pakistan Democratic Movement (PDM) also raised fuel and diesel prices significantly in August. The rising cost of oil around the world was cited as the reason for this action.
Inflationary and Economical Consequences
With the current fuel price increase, August inflation is certain to rise again. While inflation fell slightly from its record high of 38% in May to 37% in June, the State Bank of Pakistan (SBP) decided to keep its key interest rate at 22%.
The Economy and the New IMF Agreement
Pakistan’s economy has been struggling for some time, but the recent COVID-19 outbreak, global energy crisis, and massive floods have only made things worse. The recent $3 billion standby deal with the International Monetary Fund (IMF) has provided a temporary reprieve from the country’s rising foreign debt, but only for the time being. As part of the agreement with the IMF, the government must gradually eliminate a number of programmed designed to help the poor. In this larger context of subsidy reduction, the increase in fuel prices makes sense.
The Caretaker Prime Minister’s decision to increase gasoline prices by more than Rs17 a litre illustrates the delicate balancing act that must be performed between fluctuations in international markets, pressures on the home economy, and the need to maintain fiscal sustainability. While this may seem like an attempt to bring domestic fuel costs in line with global trends, it will nonetheless have far-reaching effects on inflation and public opinion. The continued economic issues facing Pakistan and the country’s involvement with foreign institutions like the IMF highlight the difficulty of sustaining stability while still meeting the demands of the populace. The decision’s context within the national economic trajectory will become obvious as citizens and experts weigh the effects of the fuel price hike.