Pakistan Prime Minister Cancels Fuel Price Increase to Save His Government

[mehru]

Pakistan’s Prime Minister Yousuf Raza Gilani today reversed a recent increase in gasoline prices as he struggles to save his government from possible collapse after losing its majority in parliament.

Gilani’s main ally, the Muttahida Qaumi Movement, quit the government last week over a Jan. 1 rise in state-controlled gasoline prices. Pakistan’s main opposition leader, former prime minister Nawaz Sharif, gave the ruling alliance a six-day deadline on Jan. 4 to accept demands including a crackdown on corruption and the withdrawal of this year’s energy price increase or face a campaign for its removal.

Gilani, who met with leaders of the main political parties in the parliament building in Islamabad today, said the government has removed the 7-rupee increase in the price of a liter of gasoline, taking the rate back to 72.96 rupees (85 cents).

“We took the leaders of all political parties into confidence,” the embattled prime minister, said in a speech to legislators. “We have managed to succeed in resolving this public issue.”

The government of President Asif Ali Zardari was stripped of its majority Jan. 2 when the MQM, its largest ally in the National Assembly, quit the government coalition over Gilani’s effort to cut gasoline subsidies by increasing prices.

The price of a liter of gasoline rose to 79.67 following the increase. Pakistani consumer prices jumped 15.5 percent in November from a year earlier, the highest rate among 17 Asian economies tracked by Bloomberg.

Sharif, who had initially given Gilani 72 hours to adopt his agenda, extended the period by three days after the assassination of the governor of Punjab province in the capital. Salman Taseer, a senior member of Zardari’s Pakistan Peoples Party, was shot 27 times by one of his police guard as he left an Islamabad restaurant Jan. 4.

Pakistan Prime Minister Cancels Fuel Price Increase to Save His Government - Bloomberg

 

[KS]

Yaar 73 PKR is no big deal.......We are paying 115 PKR for a litre over here.

 

[mjnaushad]

Yaar 73 PKR is no big deal.......We are paying 115 PKR for a litre over here.

WTF...... Do you know INR is better than PKR.???

 

[ares]

Fasten your seat belts ..be ready for hyperinflation people..this government is not brave enough to enforce tough measures..plus its allies wont let it take any.

 

[Rafi]

15% is hardly hyper inflation.

 

[KS]

WTF...... Do you know INR is better than PKR.???

61 INR per litre dude , roughly 115 PKR.

p.s.: I mentioned 115 PKR , not INR.

 

[ares]

15% is hardly hyper inflation.

Right now your budget defict is still 3%(and inflation 15%) ..let this FY end ..deficit will reach 7-8% and inflation will go over 25%.

 

[Imran Khan]

first of all why the hell they increase prises now who will reduce other daily used items prises which increased in last three days stupids.

 

[Rafi]

Right now your budget defict is still 3%(and inflation 15%) ..let this FY end ..deficit will reach 7-8% and inflation will go over 25%.

Thank you for your concern, we will get through this - don't worry

 

[mjnaushad]

61 INR per litre dude , roughly 115 PKR.

p.s.: I mentioned 115 PKR , not INR.

Ohh... I thought 115 INR.... 115 PKR is high but not that bad as i thought

 

[vking]

That will increase the fiscal deficit of gov...which may lead to borrowing more from IMF...

 

[flameboard]

atleast its a move

 

[ares]

That will increase the fiscal deficit of gov...which may lead to borrowing more from IMF...

IMF is in no mood to lend Pakistan any more money ..eventually Pakistani govt will have to borrow money from State bank of Pakistan(ie.print more money) leading to sharp rise in inflationary prices.

 

[Nothing]

WASHINGTON: The United States signaled Thursday it opposes the Pakistani government’s reversal of controversial fuel price hikes.

“What we’ve said all along is that the reforms that the government of Pakistan is undertaking are difficult, but they’re important for its long-term economic stability,” Mark Toner, a State Department spokesman, told reporters.

“Well, that is our belief and that is our position,” Toner said when asked if it was a “bad thing” for Pakistan to reverse the fuel price increases.

“Our position is that … Pakistan needs to undertake difficult economic reforms that are going to require some pain, frankly, politically,” Toner said when asked to spell out what he meant by the US position.

“But beyond that, I’m not going to weigh into what is a domestic political debate in Pakistan,” Toner said.

In Islamabad, Prime Minister Yousuf Raza Gilani on Thursday caved into political pressure and reversed fuel price hikes, in a move designed to prevent his fragile government from collapsing.

Rolling back the six-day-old kerosene, diesel and fuel price increases of between nine and 5.6 per cent was one clause in a package of 11 reforms demanded by main opposition leader Nawaz Sharif in a 72-hour ultimatum on Tuesday.

Sharif later extended the ultimatum, which threatened to expel the ruling party from government in Punjab province, to begin after three days of mourning for Pakistani politician Salman Taseer, who was shot dead the same day.

www.dawn.com - Security Verification

 

[Vassnti]

IMF is in no mood to lend Pakistan any more money ..eventually Pakistani govt will have to borrow money from State bank of Pakistan(ie.print more money) leading to sharp rise in inflationary prices.

The IMF also criticised the decision. “They’re inefficient and untargeted so that the bulk of the benefit from the energy subsidy goes to higher income individuals and large companies,” IMF spokeswoman Caroline Atkinson said

Daily Times - Leading News Resource of Pakistan

The rich get subsidies and the poor pay the taxes