Pakistan Prime Minister Imran Khan’s relief measures, which are likely to cost his government up to Rs300 billion ($1.7 billion) in subsidies, would be met by “cutting” various expenditures, a finance ministry official said on Tuesday, ruling out the possibility the International Monetary Fund (IMF) could object to them.
In a bold step, PM Khan on Monday slashed petroleum prices by Rs10 per liter and the power tariff by Rs5 per unit, in addition to other relief measures mainly for the information technology (IT) sector.
The development comes at a time when the country’s opposition parties are pushing for a no-confidence motion in parliament to dislodge PM Khan’s government.
“This is a Rs250-Rs300 billion relief package and will be met through cutting different expenditures,” Muzzamil Aslam, a spokesman for Pakistan’s finance and energy ministries, told Arab News.
“The package requirement will be met through adjustments, including in the [public sector] companies’ dividends and the amount the country has received for COVID-19 from the IMF. The funds are still lying with us and we will use that amount.”
Apart from the cuts, the premier has promised to freeze further increase in energy prices until the next budget, which will be announced in June.
The prime minister announced the measures amid increasing prices of most of the commodities and mounting pressure to tame the burgeoning inflation.
Inflation in Pakistan was recorded at 12.24 percent in February on a year-on-year (YoY) basis, compared to 13 percent in the previous month, according to Pakistan’s Federal Bureau of Statistics. It has averaged at 10.5 percent during the current fiscal year, against 8.3 percent for the same period last year.
The announcement of the relief package came a month after the IMF approved $1 billion disbursement to Pakistan after completing a sixth review of the country’s reforms under its $6 billion loan program secured in 2019.
