On Sunday, Pakistan’s Finance Ministry announced to lift diesel and gasoline prices by 35 rupees or $0.14 a liter.
This decision came after the nation’s currency value dropped by 12.00% last week following the price cap’s removal.
The International Monetary Fund opposed the slashing of diesel and gasoline price caps. Hence, it will visit the country this month to discuss its currency funding program.
Meanwhile, Pakistan’s finance minister hopes the announcement will dispel speculation of a higher diesel price hike or supply woes.
He added that the local oil and gas authorities recommended the increase amid the higher cost of buying energy costs overseas.
On Saturday, local diesel stations had long lines as residents filled their tanks due to price hike speculations.
Presently, Pakistan is in the midst of a balance of payment crisis. Besides, the declining value of its currency is anticipated to push imported goods costs.
Hence, analysts believe that a successful IMF visit is critical to the country, which is desperate to secure external financing.
According to the latest statistics, Pakistan has less than three weeks’ worth of import cover in its foreign exchange reserves.
Besides, its local currency traverses a crucial path against the greenback as one US dollar equates to 250 Pakistani rupees.
EU Diesel Price Cap to Limit Russia’s Buyers
Elsewhere, experts believe that the European Union’s proposed price cap on Russian diesel could be high enough to allow the nation to continue its export. However, it could limit Moscow’s top Asian buyers, who have become used to purchasing cheap Russian crude for self-refining.
This price cap is set to be implemented on February 05. It is part of several Western measures to slash the Kremlin’s export revenues. Also, it is aimed at deterring the country’s ability to fund its war against Ukraine.
According to a European trader, the proposed diesel price cap is in line with the $60.00/bbl cap imposed by G7 nations on Russian crude exports.
