Pakistan’s caretaker government has announced another round of fuel price hikes, pushing the prices of petrol and diesel to an unprecedented high, surpassing Rs 330 per litre. This decision comes against a backdrop of double-digit inflation, exacerbating the financial difficulties of this cash-strapped country.
On Friday evening, the Finance Ministry announced a price hike, with petrol increasing by Rs 26.02 and diesel by Rs 17.34 per litre. Permission for these treks was granted by Acting Prime Minister Anwaarul Haq Kakar. Following this increase, the cost of petrol and high speed diesel (HSD) crossed the threshold of Rs 330 per litre, marking a significant rise.
After the hike, petrol and high-speed diesel (HSD) cost more than Rs 330 at petrol stations, “a psychological barrier that has been crossed for the first time in the country’s history”, writes the newspaper Dawn. These fuel price increases are particularly heavy as they follow a sharp 27.4 percent increase in the inflation rate observed in August, affecting all sectors of society, given that gasoline and HSD are essential for private and public service vehicles.
It is important to note that petroleum products in Pakistan are not subject to Goods and Services Tax (GST). However, the government imposes a petroleum development levy (PDL) of Rs 60 per liter on petrol and Rs 50 on HSD as part of its commitment to the International Monetary Fund (IMF). In July, Pakistan received $1.2 billion from the IMF as part of a $3 billion bailout package aimed at stabilizing the country’s fragile economy.
Pakistan’s economy has been in a downward spiral for several years, leading to uncontrolled inflation and increasing pressure on the country’s poor masses. This surge in fuel prices is exacerbating the financial difficulties faced by a significant portion of the population, making it increasingly difficult for them to make ends meet.