Islamabad: Pakistan and the International Monetary Fund (IMF) have failed to reach an agreement on the fuel relief scheme and the financial aspects of the gas sector. The main difference in the talks is on how wide the scope of the subsidy should be to reduce the burden of rising fuel prices.
According to sources, the IMF has stressed a method of directly benefiting low-income and deserving citizens instead of general relief. The fund is of the opinion that targeted assistance would be more appropriate due to limited resources rather than widespread subsidies on fuel.
Discussions are also underway between the government and the IMF on fixing the price of petrol. Officials presented a detailed estimate of the cost of petrol during the talks. According to available information, the cost of imported petrol is about Rs 250 per litre, while its price for consumers is about Rs 390 per litre. The final price also includes taxes and various margins.
Sources say that the government is not in favour of immediately ending the fuel relief programme for people using motorcycles and small vehicles. However, the IMF has expressed reservations about continuing the scheme after the initial three-month period.
The government has also presented an estimate regarding the financial impact of the three-month programme. According to sources, the total cost of the scheme during this period is likely to exceed Rs 75 billion. This financial burden has become a key point in the talks regarding the sustainability of the programme.
On the other hand, the receivables of about Rs 1.4 trillion of the gas sector are also part of the negotiations. The government and the IMF are also discussing the mechanism for recovering this amount and reducing the financial pressure on the sector.
In the current state of negotiations, the government will have to strike a balance between providing relief to the public and maintaining fiscal discipline. If a targeted approach is adopted, efforts can be made to limit the scope of assistance and directly benefit the deserving consumers. The final decision on the mechanism is expected to come out in the upcoming negotiations.
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