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cash crunch Battling the coronavirus, Pakistan on Tuesday increased the tax on natural gas. After this the price of gas will increase. Due to this industrial as well as common consumers will now have to loosen their pockets more. This step has been taken under the terms of financial incentives. The purpose of this effort of the government is to bring the six billion dollar stimulus package from the International Monetary Fund back on track. Under this, the tax rate on natural gas has been increased from 16 percent to 112 percent for domestic and industrial customers.
Pakistan facing economic crisis
Pakistan is currently grappling with instability caused by an economic crisis, devastating floods last summer and recent escalation of violence. A significant portion of the 2019 stimulus package, $1.2 billion, has been held up since December. The Monetary Fund has urged Pakistan to raise more cash. Experts said increasing the tax on natural gas would increase the cost of production. Due to this, the already increased inflation will increase further.
Tax increasing due to IMF conditions
Pakistan has been continuously increasing taxes to satisfy the International Monetary Fund (IMF). Under this, a few days ago, Pakistan has approved the imposition of new taxes on electricity consumers. With this, the government is expected to get an additional revenue of Rs 170 billion. The Government of Pakistan gave this information in an official statement. This step is being seen as a condition placed by the IMF. Before releasing a new installment of $ 1.1 billion under the relief package, the Monetary Fund had asked to take some tough steps. Pakistan’s foreign exchange reserves, facing a cash crunch, have remained less than three billion dollars. To avoid financial collapse, it is in dire need of financial help and a relief package from the IMF at this time.
Petrol, diesel prices were also increased
The Pakistan government, which is facing a cash crunch, had increased the prices of petrol and diesel by Rs 35-35 per liter in January. Due to this, the people of the country, who are already struggling with inflation, have got a big blow. The prices of kerosene oil and light diesel oil were also increased by Rs 18 per liter each. With this, the price of petrol in Pakistan has gone up to Rs 249.80 per litre, high-speed diesel to Rs 262.80 per litre, kerosene to Rs 189.83 per liter and light diesel to Rs 187 per litre.
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