The government of Pakistan has clarified that the current subsidy on petroleum products is temporary and will be adjusted according to global oil prices, amid concerns raised by the International Monetary Fund (IMF) over prolonged financial support.
Officials from the Ministry of Finance informed the IMF that petrol and diesel prices will continue to fluctuate under the terms of Pakistan’s ongoing loan agreement. The IMF expressed reservations about extending petroleum subsidies further, highlighting the need for fiscal sustainability amid global market volatility.
Protection for vulnerable citizens
To shield low-income families from rising costs, the government announced an increase in the Benazir Income Support Programme (BISP) stipend by Rs 5,000. The quarterly stipend will rise from Rs 14,500 to Rs 19,500 for the 12 million BISP beneficiaries starting January 2027.
Additionally, consultations are underway with provincial governments to extend subsidies to motorcycle and rickshaw drivers. The government has also decided not to impose taxes on fertilizers and agricultural chemicals for now, deferring the potential imposition of the Federal Excise Duty (FED) to the next budget cycle.
IMF and global institutions monitor economic impact
The ongoing war in the Middle East has exacerbated the global energy crisis, prompting the IMF, World Bank, and International Energy Agency to form a joint task force. The group aims to assess economic consequences, provide financial aid, and guide policy measures for affected nations.
An IMF spokesperson noted that the conflict has caused sharp increases in oil, gas, and fertilizer prices, putting developing and importing countries at particular risk. Disruptions in global supply chains, travel, and currencies have raised fears of inflation, potentially slowing worldwide economic growth. Central banks in affected nations may adopt stricter measures to stabilize markets.
