Govt likely to increase fuel prices by Rs20 from Sept 1
The coalition government is likely to increase oil prices by Rs20 per liter from 1 September, in an attempt to relaunch the IMF's $6 billion bailout plan, revealed sources familiar with the affair on Thursday.
According to the letter of intent (LOI) that the government sent to the IMF, it had written that a sales tax had been levied on petroleum products. However, sources indicated that the sales tax rate may be increased starting next month.
In order to meet IMF requirements, the federal government is likely to eliminate sales tax exemptions on petroleum products for the agricultural sector effective September 1, the sources confirmed.
The authorities are considering introducing a 10.5% sales tax on petroleum products starting in October under the terms set by the International Monetary Fund (IMF).
It is relevant to note that the government has already eliminated subsidies on petroleum products in accordance with an IMF agreement, triggering a surge in inflation.
IMF executive board meeting on August 29
On August 17, Finance Minister Miftah Ismail confirmed that the government has sent the letter of intent (LoI) to the IMF after having fulfilled the preconditions. Leading the way to the Executive Board’s meeting.
In his conversation with reporters, the Minister of Finance said that the document— received on August 12 — was sent to the lender following the signing of the Interim Governor of the State Bank of Pakistan (SBP), Murtaza Syed.
This paved the way for the August 29 IMF Executive Board meeting, at which Pakistan asked to approve the seventh and eighth reviews and release $1.17 billion under the Extended Fund Facility (EFF) will be taken up.