The government on Thursday further increased petrol price by Rs137 per litre, or by 43%, to history’s highest ever level of Rs458 after Prime Minister Shehbaz Sharif decided to impose more taxes on consumers.
The Rs458 per litre new price of petrol is also far higher than the increase in the international market, as PM Shehbaz decided to increase the petroleum levy to a record Rs160.61 per litre on petrol. With one stroke of a pen, the premier increased the petroleum levy on petrol from Rs106 to Rs161 per litre – an increase of Rs55 in taxes.
His government also increased the high-speed diesel price to Pakistan’s highest level of Rs520 per litre – an increase of Rs185 per litre or 55%. But the prime minister abolished the petroleum levy on high-speed diesel and decided to retain Rs2.5 per litre carbon levy in addition to all import taxes.
The government increased the prices after it failed to convince the International Monetary Fund (IMF) to allow it to give more subsidies. The IMF capped the maximum subsidies on fuel at Rs152 billion.
Earlier in the day, Prime Minister Muhammad Shehbaz Sharif on Thursday outlined a series of policy measures to shield Pakistan’s economy from the adverse effects of the ongoing regional conflict, emphasizing austerity, protection of vulnerable segments, support for agriculture, and national unity to sustain economic stability and growth.
Addressing a high-level meeting attended by federal and provincial leadership, the prime minister said Pakistan had made all possible efforts to help secure a ceasefire in the region and reduce tensions through diplomatic engagement led by Deputy Prime Minister and Foreign Minister, Senator Mohammad Ishaq Dar and the military leadership, including Field Marshal Asim Munir. He noted that Islamabad’s efforts to promote peace were continuing and expressed hope that stability would soon return to the region.
The prime minister said Pakistan’s economy, which had stabilized over the past two years through coordinated efforts by federal and provincial governments, was now facing renewed pressure due to global uncertainty and supply disruptions. He stressed that the government had already taken difficult decisions to manage fuel prices and maintain stability in essential sectors.
He said the government absorbed a major portion of the fuel price shock by reducing the petroleum development levy and equalizing diesel and petrol prices through a Rs55 adjustment. He described it as a necessary step to protect citizens from a heavier financial burden.
Prime Minister Shehbaz Sharif also announced a range of austerity measures adopted by the government, including voluntary surrender of two months’ salaries by federal cabinet members, a 50 percent reduction in government fuel consumption, and restrictions on the use of official vehicles. He said members of parliament had also contributed to national savings efforts in solidarity with the public.
The prime minister said the federal government had allocated Rs129 billion in the past three weeks to provide a financial cushion against the economic impact of the crisis, while Rs100 billion savings were generated through cuts in the Public Sector Development Programme (PSDP) to support urgent national priorities.
He underscored the importance of national political consensus in responding to the evolving situation, appreciating the constructive role played by political leaders, including Chairman PPP, Bilawal Bhutto Zardari, and acknowledging the supportive consultations held at the Presidency with participation from provincial leadership.
The prime minister said the government’s foremost priority was to safeguard low-income households and emphasized a policy shift toward protecting vulnerable groups. He called on affluent segments of society to demonstrate sacrifice and solidarity during the challenging period.
The prime minister further urged federal and provincial governments to postpone non-essential development projects and redirect savings toward relief measures for the poor and stabilization initiatives.
He said continued political stability was essential for sustaining economic stability and growth, adding that coordinated national action and disciplined implementation of conservation policies would help protect workers, widows, and underprivileged communities during the crisis.