Pakistan Tells IMF Higher Fuel Costs Will Be Passed On to Consumers
ISLAMABAD, PAKISTAN — WEB DESK: Pakistani authorities have told the International Monetary Fund that increases in fuel costs will be passed on to consumers while targeted support will be used to cushion vulnerable households, as discussions continue over fiscal stability, energy-sector debt and structural reforms.
IMF mission that Pakistan would continue implementing structural reforms despite economic pressures linked to the ongoing Gulf conflict. The report said authorities also indicated that the burden of higher fuel prices would be transferred to consumers.
At the same time, Pakistani officials said targeted subsidies had been introduced to protect vulnerable sections of society from the impact of rising fuel costs.
IMF mission chief Iva Petrova urged Pakistan to use the country’s social-protection system for targeted assistance rather than broad fuel subsidies. The Fund also raised issues involving circular debt, health and education spending, and an Rs853 billion statistical discrepancy in federal and provincial accounts.
The IMF mission is currently reviewing Pakistan’s economic performance under the fourth review of the Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF). Finance Minister Muhammad Aurangzeb formally opened review discussions with the mission this week. Successful completion of the reviews could unlock around $1.2 billion in financing, including about $1 billion under the economic programme and $200 million under the climate facility.
The petroleum levy has become particularly important because of its contribution to government revenue. Pakistan collected a record Rs1.567 trillion through the levy in FY2025-26, while the current fiscal year’s budget targets approximately Rs1.68 trillion.
However, the Finance Ministry said last week that the petroleum levy was not the central point of Pakistan’s $7 billion IMF programme, responding to media reports linking it directly to the lender’s core conditions.
The government has meanwhile slightly reduced domestic fuel prices effective September 30. Petrol was cut by Rs1.49 per litre to Rs387.54, while high-speed diesel was reduced by Rs2.73 to Rs402.24 per litre. Taxes and duties remain at Rs114 per litre on petrol and Rs100 per litre on diesel, according to the Petroleum Division notification.
Higher petroleum costs have implications beyond motorists. Economists say increases can feed into transportation, logistics, agriculture and business costs, creating wider inflationary pressure. Pakistan’s national CPI inflation stood at 11.15% year-on-year in August 2026, according to Pakistan Bureau of Statistics data cited by The Express Tribune.
The ongoing IMF review will therefore be important in determining how Pakistan balances fiscal targets and energy-sector reforms with efforts to protect lower-income households from higher living costs.
