The International Monetary Fund (IMF) has asked Pakistan to address irregularities in its fuel pricing system, even though it had prior knowledge of Rs152 billion subsidy cap introduced amid high global oil prices due to the tensions between United States (US) and Iran.
While reports quoted sources as saying that the staff-level agreement reached on March 29 remained in effect, and that the subsidy was rolled out with the IMF already in the loop, Finance Minister Muhammad Aurangzeb is expected to brief IMF officials at the IMF-World Bank Spring Meetings next week on how provinces are sharing the burden of these subsidies through budget adjustments.
The IMF, however, has maintained its stance against blanket relief on fuel.
To manage pressure on the exchequer, the government had initially shifted the petroleum development levy (PDL) between petrol and diesel. It later moved toward a more targeted subsidy approach, with provinces now contributing through reworked budgets.
Officials said that the IMF remains concerned about the current structure, particularly the gap in diesel pricing, and wants this corrected without delay.
At present, no PDL is being charged on diesel, even though the budget had set a target of Rs80 per litre.
The shortfall has been compensated by higher levies on petrol, but that cushion has reduced after the recent cut of Rs80 per litre in petrol prices, prompting the need for another review of the pricing mechanism.
Petrol consumption, which averages around 660,000 tonnes per month, has helped offset some losses, however, diesel usage is currently close to 600,000 tonnes which is expected to increase during the harvest season, further ingstrain revenues.
While officials say current economic indicators are still aligned with IMF programme targets, they noted that the next fiscal plan will require adjustments. This framework will be finalised in consultation with the IMF ahead of the 2026–27 budget.
They added that the outstanding claims by oil companies, which had crossed Rs129 billion, have stabilised after recent price revisions that passed on import costs. Payments are being released, though 10 percent is being held back until audits are completed.
Pakistan’s fuel reserves currently stand at about 590,000 tonnes of petrol and 480,000 tonnes of diesel, enough for roughly 26 and 20 days, respectively.
Additional shipments of 70,000 tonnes of petrol and 140,000 tonnes of diesel are on the way, though concerns around the balance of payments persist.
Officials also said that the talks on restarting diesel imports from Kuwait have moved forward, but deliveries have yet to begin, even as Iran has allowed Pakistan-flagged vessels to pass through the Strait of Hormuz.
