The IMF has told Pakistan to remove distortions in petroleum pricing as soon as possible, even though it quietly accepted the government’s Rs152 billion subsidy for consumers amid the massive global oil price surge caused by the US-Israel war on Iran and the closure of the Strait of Hormuz.
According to senior officials, the staff-level agreement reached with the IMF on March 29 remains unchanged. The Rs152 billion petroleum subsidy was introduced with the Fund’s prior knowledge, and it is now being financed through contributions from the provinces.
However, the IMF is still uncomfortable with across-the-board subsidies, especially the current distortion in diesel pricing. The petroleum development levy (PDL) on diesel has been brought down to zero (against a budgeted Rs80 per litre), while petrol carries a much higher levy to compensate. This balance got further disturbed after the Prime Minister recently reduced petrol prices by Rs80 per litre.
Finance Minister Muhammad Aurangzeb and his team are expected to brief IMF management on the provincial contributions during the upcoming spring meetings next week.
Officials said economic indicators are mostly on track for the current fiscal year, but bigger adjustments will be needed for next year’s budget framework. Petrol stocks stand at about 26 days and diesel at 20 days, with new cargoes already in transit. Discussions to resume diesel imports from Kuwait are also progressing.
The government has introduced a mechanism to settle price differential claims of oil companies, retaining 10% until proper audits are completed.
In short, while the IMF has given some space on subsidies due to the extraordinary global situation, it wants Pakistan to fix pricing distortions quickly and move towards a more sustainable system.
IMF asks Pakistan to remove fuel price distortions amid subsidy pressures https://t.co/36vlulASmT
— Dawn.com (@dawn_com) April 6, 2026
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