ISLAMABAD: The International Monetary Fund has advised Pakistan to avoid broad-based fuel subsidies and instead focus relief efforts on low-income segments of the population.
According to reports, the global lender recommended that any subsidy on petrol should be limited to vulnerable groups, warning that blanket subsidies could place additional pressure on the country’s already strained economy.
The IMF also suggested increasing financial support through the Benazir Income Support Programme rather than reducing fuel prices. It proposed an increase of Rs5,000 in assistance under the programme.
Sources indicated that, if implemented, beneficiaries of BISP could receive up to Rs19,500 starting January 2027. The government has reportedly assured the IMF that funding and stipends under the programme will be enhanced.
Meanwhile, after talks with the IMF, authorities have temporarily postponed the imposition of Federal Excise Duty (FED) on fertilisers and other agricultural inputs to ease pressure on the farming sector.
Officials believe that targeted cash transfers would provide more effective relief to low-income households amid rising inflation, compared to across-the-board fuel subsidies.
Oil Prices Surge Amid Global Tensions
Global oil markets also saw a sharp uptick, with prices climbing nearly 7% after Donald Trump signaled continued US military action against Iran.
Brent crude rose by $6.84, or 6.8%, to reach $108 per barrel, while US West Texas Intermediate (WTI) crude gained $6.40, or 6.4%, to trade at $106.52 per barrel.
Analysts say the surge reflects growing investor concerns over potential supply disruptions as geopolitical tensions in the region persist.
