The prices of petroleum products are likely to go up again as the government on Monday announced increasing petroleum development levy (PDL) by Rs4 every month under an agreement with the International Monetary Fund (IMF).

Finance Adviser Shaukat Tarin, flanked by Finance Minister Hammad Azhar, briefed the media in Islamabad on the staff-level agreement reached with the IMF earlier today.

The Pakistani authorities and IMF had reached a staff-level agreement on policies and reforms needed to complete the sixth review under the EFF.

“We have to increase PDL by Rs4 every month to take it to Rs30,” said Tarin, adding that IMF had demanded Pakistan to raise a revenue of Rs600 billion through PDL.

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The adviser said after prolonged negotiations with the international lender, IMF agreed to reduce the tax target of PDL to around Rs365 billion.

Earlier this month, Prime Minister Imran Khan had rejected the Ministry of Finance’s proposal seeking a hike in the prices of petroleum products in a bid to boost revenue.

It may be noted that petroleum prices in Pakistan have touched an all-time high with petrol being sold at Rs146 per litre.

Tarin, in today’s presser, said that IMF will release around $1 billion after Pakistan “successfully reached an agreement” with the international lender.

Also read: PM Imran rejects proposal to jack up petroleum prices

He said he personally believed in broadening the tax base instead of “tax pyramiding”. “Increasing electricity tariffs creates issues… it makes industrial sector uncompetitive and puts burden on poor people ,” he added.

Speaking on the occasion, Energy Minister Hammad Azhar said as part of the agreement with the IMF, the electricity tariffs will be increased after a few months.

“We have recently increased the base tariff and after a few months the increase will be much lower than the last one,” he added.

The minister said the agreement with the IMF will further stabilise the economy.

After the release of $1 billion, the total loan amount will still be $3 billion in over two years, which is far less than what had been agreed in May 2019 due to derailment of the programme, first in January 2020 and then in June this year.

However, the agreement has yet to be approved by the Executive Board of the IMF, which will take up Pakistan’s request only after the government implements all prior actions.