ISLAMABAD: Pakistan sharply increased taxes on natural gas Tuesday to comply with a long-stalled financial bailout, and both industrial and everyday consumers were expected to feel the pain.
The government’s bid to revive a $6 billion bailout from the International Monetary Fund led it to hike taxes on natural gas for domestic and industrial consumers from 16% to 112%. A similar increase in the price of electricity is expected to be announced this week.
“The prices of cooking oil and all food items have doubled in the past less than one year, but there has not been any increase in our income,” said Zameen Gul, 32, the father of three who works for a construction company in Peshawar. “I don’t know how are we going to survive.”
The tax hike on natural gas on Tuesday is likely to further increase the cost of production and an increase in already spiraling inflation, experts said. “Pakistan’s economy is currently like a rudderless ship, which is heading for a crash,” said Ashfaq Ahmad, a Pakistani economist.
Ahmad has been a critic of seeking bailouts from the IMF, but he said Pakistan had no other option. “The government will have to impose new taxes and poor people will pay a heavy price for the bad policies of past governments which relied on the IMF loans,” he said.
Miftah Ismail, a former Pakistani finance minister, said the next six-to-eight months will be difficult for Pakistan, but the country could, at some point, back away from the brink of default.
The latest development comes after Pakistani agreed to impose new taxes of Rs 170 billion for a bailout. Ishaq Dar, the country’s finance minister, this week said that he expected the IMF to release the stalled $1.2 billion tranche from the 2019 deal.
The government’s bid to revive a $6 billion bailout from the International Monetary Fund led it to hike taxes on natural gas for domestic and industrial consumers from 16% to 112%. A similar increase in the price of electricity is expected to be announced this week.
“The prices of cooking oil and all food items have doubled in the past less than one year, but there has not been any increase in our income,” said Zameen Gul, 32, the father of three who works for a construction company in Peshawar. “I don’t know how are we going to survive.”
The tax hike on natural gas on Tuesday is likely to further increase the cost of production and an increase in already spiraling inflation, experts said. “Pakistan’s economy is currently like a rudderless ship, which is heading for a crash,” said Ashfaq Ahmad, a Pakistani economist.
Ahmad has been a critic of seeking bailouts from the IMF, but he said Pakistan had no other option. “The government will have to impose new taxes and poor people will pay a heavy price for the bad policies of past governments which relied on the IMF loans,” he said.
Miftah Ismail, a former Pakistani finance minister, said the next six-to-eight months will be difficult for Pakistan, but the country could, at some point, back away from the brink of default.
The latest development comes after Pakistani agreed to impose new taxes of Rs 170 billion for a bailout. Ishaq Dar, the country’s finance minister, this week said that he expected the IMF to release the stalled $1.2 billion tranche from the 2019 deal.