The Pakistan government has resolved to create additional fiscal space for subsidizing petrol by further slashing the federal development budget. An extra reduction of Rs63 billion has been approved, increasing the total cut to Rs163 billion for the current fiscal year.
This adjustment lowers the development budget to Rs837 billion from the initially allocated Rs1,000 billion. Notably, the government had already trimmed Rs100 billion from this budget last month. These budgetary cuts are primarily aimed at supporting subsidies on petrol, reflecting the government’s strategy to ease fiscal pressures while providing relief to consumers.
The most significant reductions have been applied to development funds allocated to provinces and special regions, with some cuts reaching up to 20 percent. Furthermore, allocations for water resources and the National Highway Authority have been decreased by over 17 percent. This reallocation underscores the government’s prioritization of fuel subsidies amid economic challenges.
In a significant development last week, Prime Minister Shehbaz Sharif announced a reduction in petrol and diesel prices across the country. The petrol price was lowered by Rs11.83 per litre, setting the new rate at Rs366.58 per litre. Meanwhile, the diesel price saw a reduction of Rs134.81 per litre, bringing it down to Rs385.54 per litre.
