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Pakistan Raises Natural Gas Taxes In Bailout Bid

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(CTN NEWS) – ISLAMABAD – Pakistan sharply increased natural gas taxes Tuesday to comply with a long-stalled financial bailout, and both industrial and everyday consumers were expected to be hit.

The government shocked many Pakistanis who are already struggling by raising tariffs on natural gas for home and industrial consumers from 16% to 112% to revive a $6 billion bailout from the International Monetary Fund.

This week, it’s anticipated that the power price will increase similarly.

The cost of cooking oil and all other food goods has doubled in less than a year, but Zameen Gul, a 32-year-old father of three who works for a construction company in Peshawar, claims that his family’s income has not increased. “I’m not sure how we’re going to make it,”

Pakistan raises natural gas

A worker fills gas into a car at a CNG station in Peshawar, Pakistan, Tuesday, Feb. 14, 2023. (AP Photo/Muhammad Sajjad)

Pakistan is battling instability brought on by an economic crisis, the devastation of last summer’s floods, and a recent uptick in violence. Since December, a crucial $1.2 billion piece of the 2019 bailout has been blocked, and the IMF has urged Pakistan to obtain additional funds.

The increase in natural gas taxes According to experts, Tuesday is likely to push up the cost of production and accelerate the already escalating inflation.

According to Pakistani economist Ashfaq Ahmad, who has previously provided the government with advice, the country’s economy is currently like a ship without a rudder and is on the verge of collapsing.

Ahmad has opposed requesting bailouts from the IMF but claimed that given the situation, Pakistan has no other choice.

The Associated Press quoted him as saying, “The government would have to impose new taxes and impoverished people will pay a high price for the faulty practices of earlier governments who mostly relied on the IMF loans.”

Pakistan raises natural gas taxe 1

A vendor fills gas cylinder at a shop, in Karachi, Pakistan, in Karachi, Pakistan, Tuesday, Feb. 14, 2023. (AP Photo/Fareed Khan)

Former Pakistani finance minister Miftah Ismail predicted that while the government will face challenges over the next six to eight months, it may eventually be able to pull back from the verge of default.

In exchange for a bailout, Pakistan committed in 2019 to enact new levies totaling 170 billion rupees. Ishaq Dar, the finance minister, told reporters this week that he anticipated the IMF would release the deal’s blocked $1.2 billion tranche.

Pakistan must further tighten curbs on imports of raw materials for the industrial sector as its foreign exchange reserves have decreased to below $3 billion. In recent weeks, the crisis has forced the closure of several factories and the staff layoffs of others.

During their meeting, Dar told President Arif Alvi about his recent discussions with the IMF.

Pakistan raises natural gas taxe 3

eople visit a market to buy vegetables and other stuff, in Karachi, Pakistan, Tuesday, Feb. 14, 2023.(AP Photo/Fareed Khan)

The government wants to impose extra taxes through an ordinance, according to a statement from Alvi’s office on Tuesday, but he suggested to Dar that the government call a meeting of parliament to address the increased levies needed to secure an IMF bailout.

Amjad Ali, a 45-year-old rickshaw driver in Lahore, expressed his dissatisfaction with the former prime Imran Khan’s leadership since prices increased dramatically. But he insisted that neither products nor prices have improved.

He asserted that Shahbaz Sharif’s current administration was worse than Imran Khan’s.

Khan was removed from office in April following a no-confidence vote in parliament, and he has accused Washington of plotting a coup against him. Khan has also warned that Pakistan is in danger of going bankrupt.

Sharif claims that the disastrous floods of last summer, which claimed 1,739 lives and left billions of dollars in damage, had a significant negative impact on the nation’s economy.

Pakistan raises natural gas taxe 4

People buy spices from a shop in a market, in Karachi, Pakistan, Tuesday, Feb. 14, 2023(AP Photo/Fareed Khan)

According to economists, the increased levies might cause Pakistan’s current inflation rate of 26% to increase to 40%. However, they worry that if Pakistan does not receive the IMF loan, the inflation rate may soar to more over 60%.

Dar, the finance minister, believes reviving the loan will encourage friendly nations to lend money. Although experts predict that the poor will be the hardest-hit victims, he claimed that the government would implement additional taxes in a way that spares them.

According to the Asian Development Bank, 220 million people in Pakistan—or around 21%—live in poverty. Less than 10% of the population are wealthy elites, while the bulk is low- and middle-income.


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Alishba Waris is an independent journalist working for CTN News. She brings a wealth of experience and a keen eye for detail to her reporting. With a knack for uncovering the truth, Waris isn't afraid to ask tough questions and hold those in power accountable. Her writing is clear, concise, and cuts through the noise, delivering the facts readers need to stay informed. Waris's dedication to ethical journalism shines through in her hard-hitting yet fair coverage of important issues.

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