Adding to the woes of inflation-hit Pakistan, the petrol prices soared to a historic high of PKR 272 a litre, an increase of Rs 22.20, just after the country's finance minister Ishaq Dar presented a mini budget.
The new prices came into effect on Thursday. While the price of high-speed diesel touched PKR 280 per litre after a hike of PKR 17.20, kerosene will be available at PKR 202.73 a litre following a PKR 12.90 hike. Meanwhile, light diesel oil will be available at PKR 196.68 a litre after an increase of PKR 9.68, reported Geo TV.
The price hike of petroleum products comes after the International Monetary Fund (IMF) stipulated it as a pre-condition to unlock the critical loan tranche. However, the price hike will push the inflation further, with the new fiscal measures under the 'mini-budget' set to worsen things.
With the fuel price hike, economists believe the inflation in Pakistan could average 33% in the first half of 2023 before trending lower.
Meanwhile, the country's new mini budget or Finance (Supplementary) Bill 2023, presented by Dar on Wednesday, saw the government hiking the general sales tax (GST) rate from 17 percent to 18 percent for 33 categories of goods covering 860 tariff lines — including high-end mobile phones, imported food, decoration items, and other luxury goods.
The luxury items that will be subject to 25 percent sales tax in the category of food import include confectionary, jams and jelly, fish and frozen fish, sauces, ketchup, fruits and dry fruits, preserved fruits, cornflakes, frozen meat, juices, pasta, aerated water, ice cream, and chocolates.
Home appliances, cosmetics, crockery, pet food, private weapons and ammunition, shoes, chandeliers and lighting (except energy savers), headphones and loudspeakers, doors and window frames, travelling bags and suitcases, sanitary ware, carpets (except from Afghanistan), tissue paper, furniture, shampoos, automobiles, luxury mattresses and sleeping bags, bathroom ware, toiletries, heaters, blowers, sunglasses, kitchenware, cigarettes, shaving goods, luxury leather apparel, musical instruments, saloon items like hair dryers, etc., and decoration/ornamental articles will also become costlier.
It also proposes increasing the Federal Excise Duty (FED) on cigarettes and soft and sugary drinks. The new budget will also see FED on business and first-class air tickets be increased to PKR 20,000 or 50 percent — whichever is higher. A 10 percent tax will also be imposed on functions to be held at marriage halls, marquees, hotels, restaurants, commercial lawns, clubs, community places, or other places.
The FED on cement will also be raised from PKR 1.5 per kg to PKR 2 per kg.
Through the mini budget which toes the IMF line, the government aims to generate PKR 55 billion from the PKR 170 billion IMF load by the Washington-based lender.