The International Monetary Fund has called on Pakistan to wind down its fuel subsidy programme. The IMF said any future fuel assistance should be restricted, aimed at specific groups and limited in duration. An IMF spokesperson made the remarks in an interview with a news organisation.
The spokesperson said Pakistan has been asked to gradually end its fuel support and to fit any such aid within the FY2026-27 budget. The subsidies were introduced in September for low-income motorcycle users. Motorcycle and rickshaw users receive petrol vouchers worth Rs500 per week, while vehicles with engines of up to 800cc get a Rs100 per litre discount.
IMF cites broad targeting in calling for phase-out
The IMF said it had requested the withdrawal of fuel subsidies under the staff-level agreement reached on October 7. It argued that the existing scheme has a broad targeting mechanism, which is why it should be phased out. Pakistan is carrying out economic recovery measures under the IMF’s $7 billion loan programme, the spokesperson said.
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Pakistan has also committed to aligning domestic petroleum prices with international market rates, the spokesperson added.
Oil volatility and inflation pressures in Pakistan
According to the spokesperson, the ongoing Middle East conflict has become a major challenge for Pakistan, which relies heavily on Gulf countries for oil and gas imports. Higher international oil prices have contributed to inflation, which stood at 9.6 per cent in October, compared with 10.3 per cent in September.
The spokesperson warned that continued volatility in global oil prices could affect the country’s economic outlook. The IMF has also stressed reforms in state-owned enterprises and improvements in the energy sector. The Executive Board meeting is expected to take place in December, the spokesperson said.
