IMF urges Pakistan to limit petrol subsidies and accelerate energy reforms
Published 1 hour ago | By Nouman Shakeel
The International Monetary Fund (IMF) has urged Pakistan to limit the scope of subsidies on petroleum products and gradually phase out costly fuel schemes. According to the Fund, financial assistance should be directed toward deserving individuals rather than general consumers, and the process of energy sector reforms needs to be accelerated.
The IMF has also emphasized the importance of maintaining a prudent fiscal policy to curb inflation and taking measures to boost foreign exchange reserves.
According to the statement, Pakistan's economic growth rate was projected at 4 percent for the period between July 2025 and March 2026; however, a decline is now anticipated due to the impact of the Middle East crisis, with the growth rate expected to settle at 3.6 percent.
The report noted that inflation peaked in May 2026, while remittances from overseas Pakistanis helped keep the current account deficit under control.
Proposal to Limit Petrol Subsidies to Deserving Individuals
According to the IMF, financial assistance provided by the government during periods of rising oil prices should be targeted and time-bound. The Fund has advised against providing broad-based, costly fuel subsidies or expanding their scope.
The IMF also emphasized the need to improve the recovery of dues, reduce gas losses, and lower production costs to alleviate financial issues in the energy sector. The statement highlighted the importance of timely adjustments to energy prices and the implementation of necessary reforms to reduce costs.
Need for Strict Monetary Measures to Curb Inflation
According to the IMF, the State Bank needs to maintain a sufficiently tight monetary policy to keep inflation in check. Additionally, Pakistan must take steps to boost its foreign exchange reserves.
Key recommendations from the Fund include limiting fuel subsidies to deserving segments of society, reducing financial losses in the energy sector, and implementing measures to control inflation.
