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Wednesday, July 17, 2024

Government likely to increase fuel prices by Rs 50

The government is likely to jack up the fuel price in order to meet IMF's condition to increase the levy on petroleum products.

The Finance Minister, Ishaq Dar has announced a fuel price hike levy of Rs 50 against the current levy of Rs 40. This was one of the conditions of the International Monetary Fund (IMFs) to release the $ 7 billion bailout.

Moreover, the fuel price hike would also affect the dollar exchange rate and would further add to the rupee devaluation which is at Rs 268 against the dollar currently. However, the Minister said that the final decision would be made after consultation with the Prime Minister, Shehbaz Sharif.

Read more: Why Pakistan needs to think twice before accepting IMF conditions

Earlier, the Finance Minister announced that the federal government decided to raise the fuel prices by Rs35 per liter. Likewise, the prices of kerosene oil and light diesel oil had been increased by Rs18 per liter as the international market witnessed an increase of 11%.

In addition to the fuel price hike, the federal government also enhanced taxes on cigarettes with immediate effect to collect Rs 115 billion out of the planned Rs 170 billion mini-budget. According to the notification issued by FBR, the standard rate of General Sales Tax (GST) has been increased from 17 to 18% with effect from February 15, 2023.

Read more: IMF mission arrives in Pakistan for the 9th review

Furthermore, the government has increased FED on expensive brands from Rs 6.5 per cigarette to Rs 16.5 with an increase of 153 %. On the other hand, the price hike in less expensive brands is almost 98%.

Additionally, the “mini-budget” finance bill would be presented in the parliament on Wednesday, February 15 for approval. The bill will be presented before the National Assembly (NA) and the Senate during separate sessions. The Houses will then forward the bill to the standing committees for recommendations and then to the President for assent.

Read more: Downward spiral of rupee continues