Pakistan to cut energy prices to offset rising costs after invasion

ISLAMABAD, Pakistan — Pakistani Prime Minister Imran Khan announced on Monday that he is cutting fuel and electricity prices to help off...

ISLAMABAD, Pakistan — Pakistani Prime Minister Imran Khan announced on Monday that he is cutting fuel and electricity prices to help offset rising global energy prices due to Russia’s invasion of Ukraine. .

The surprise move comes at a time when Mr Khan is facing growing political discontent in his country and opposition political parties are planning large protest rallies in March against rising inflation and the management of the economy. Economics by Mr. Khan.

Fuel and electricity prices have risen sharply in Pakistan in recent months as Mr Khan’s government carried out painful reforms under an International Monetary Fund bailout. Earlier in February, the IMF approved the release of a $1 billion tranche of a $6 billion package after lengthy negotiations with Pakistani officials.

In a wide-ranging televised address on Monday, Mr. Khan said he was cutting gasoline and diesel prices by about 22 cents per gallon and electricity rates by about 3 cents per kilowatt hour.

The cuts take effect on Tuesday and will remain in place until June, he said, when the next budget year begins.

Mr Khan defended his government’s handling of the economy, saying it had inherited a weak economy with huge internal and external deficits.

A former cricketer-turned-politician, Mr Khan won the general election in 2018, basing his campaign on an anti-corruption drive and an anti-US foreign policy campaign. Since coming to power, he has struggled to stabilize a weak economy, and relations with the United States have cooled.

However, he has frequently praised China, a longtime ally of Pakistan, and courted Russian President Vladimir V. Putin.

No pipeline deal has been announced but in his speech on Monday, Mr Khan said Pakistan had agreed to buy 2 million tonnes of wheat from Russia.

He did not comment on Russia’s invasion of Ukraine, but in a statement after meeting Putin on Thursday, said he “regrets the latest situation between Russia and Ukraine” and hopes that “diplomacy could avoid a military conflict”.

Analysts said the relief in energy prices would prove temporary as it would increase inflationary pressures on the economy.

“Subsidies will only increase the budget deficit and are completely against the agreements reached with the IMF,” said Uzair Younus, director of the Pakistan Initiative at the Atlantic Council. “Rising deficits and borrowing will put pressure on the rupee in the coming weeks, crowd out private investment and create medium-term economic instability and vulnerabilities.”

Khalid Mahmood Rasool, a Lahore-based columnist, described the measures as “a brutal counterbalance to the rising political heat”.

The opposition Pakistan People’s Party launched a protest march from the southern port city of Karachi, which is expected to reach the capital Islamabad on March 8.

Opposition political parties are also currently involved in intense negotiations to bring a vote of no confidence in Parliament against Mr Khan.

“The announcement of the reduction in petrol and electricity prices is a last desperate but unsuccessful attempt to save his job,” said Marriyum Aurangzeb, information secretary of the opposition political party Pakistan Muslim League. -Nawaz.

She said Mr Khan’s government had raised fuel and electricity prices over the past three years, far more than the cuts announced on Monday.

Mr Khan also announced tax breaks in the IT sector, cash assistance to farmers and interest-free loans to students and low-income people to start businesses and build homes.

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Newsrust - US Top News: Pakistan to cut energy prices to offset rising costs after invasion
Pakistan to cut energy prices to offset rising costs after invasion
Newsrust - US Top News
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