Pakistan in a historic hike increases cost of Petrol, Diesel, Kerosene

Cash-strapped Pakistan on Wednesday night hiked the cost of petrol and gas after unleashing a mini-budget. The price of petrol has been increased to Rs 272 per liter with an increase of Rs 22.20, whereas the cost of diesel has been increased by Rs 17.20 to Rs 280 per liter.

The cost of kerosene oil has been hiked by Rs 12.90 to Rs 202.73. Whereas the cost of light diesel oil will be available at Rs 196.68 per liter after a hike of Rs 9.68.

The new costs will take effect on Thursday. The government had last increased the fuel prices by Rs 35 per liter on January 29.

Why was the cost of fuel increased?

According to a press release from the Finance Division, the increase in cost is due to the devaluation of the Pakistani rupee against the dollar. According to Geo News this historic hike is to appease the International Monetary Fund for getting critical loan tranche.

The hike in petroleum products was one of the preconditions of the IMF, and it will also lead to record-high inflation with the addition of the new fiscal measures that were announced through the mini-budget. This will be a direct hit on the country's agricultural sector and transportation sector.

The Pakistan Democratic Movement-led government aims to reduce the budget deficit and broaden the tax collection net through the mini-budget.

Increasing inflation

Due to the increasing inflation in the country, many have started downsizing their staff, while some have also shut down operations in the country. This was after the government closed imports and banned lease credit.