Pakistan to engage IMF on fuel levy adjustment to offset global price impact

The federal government has directed the Finance Division to engage with the International Monetary Fund on revising the levy structure on petroleum products to avoid passing on the impact of rising global oil prices to consumers, The News reported. 

Officials said the move follows an increase in international oil prices linked to the ongoing Iran conflict, which has put pressure on domestic fuel pricing. The government is exploring options to adjust existing levies instead of increasing retail prices.

Currently, the government imposes a levy of Rs100 per litre on petrol and Rs55 per litre on diesel, in line with commitments under the IMF programme. The Finance Division has been tasked with presenting proposals on levy rationalisation during discussions with the Fund.

The government has already allocated Rs129 billion in subsidies to maintain fuel prices, funded through reductions in development spending and savings from other expenditures.

Officials indicated that the objective is to absorb external price shocks within the existing fiscal framework while maintaining price stability for consumers.