Pakistan has assured the International Monetary Fund (IMF) under its Memorandum of Economic and Fiscal Policies that the burden of oil prices will be passed on to consumers.
Targeted subsidies will be introduced and the implementation of federal excise duty on fertilizers and agricultural chemicals will be postponed.
To mitigate the negative impact of rising fuel and food prices following geopolitical tensions in the Gulf region, the monthly stipend under the Benazir Income Support Program will be increased from Rs. 14,500 to Rs. 19,500, effective from January 2027 under the new structural benchmark.
Pakistani officials have also acknowledged that the government established the Prime Minister’s Austerity Fund, cut Rs100 billion in government development programs, saved Rs27 billion, reduced fuel allowances, and reduced non-salary expenses by 20 percent.
However, such measures may be temporary in nature, while regular fluctuations in fuel prices play a significant role in reducing demand.
The government will implement targeted subsidies to protect the vulnerable. In view of the severe volatility in oil and fertilizer prices and the general economic uncertainty, Pakistan will postpone the increase in federal excise duty on fertilizers and agrochemicals. We are aware of the strategic importance of fertilizers and the uncertainties facing the agricultural sector.