ISLAMABAD: Pressure from the International Monetary Fund (IMF) to withdraw fuel price support could exacerbate poverty and incite public unrest in Pakistan, warned Shahid Rasheed Butt, a business leader and former president of the Islamabad Chamber of Commerce and Industry, on Tuesday. Millions of farmers, transporters, and low-income households depend on affordable diesel, and removing the subsidy amid severe energy shocks would place an unbearable burden on these struggling segments.

According to Islamabad Chamber of Commerce and Industry, the IMF has raised concerns over fuel price distortions, particularly the absence of the petroleum development levy (PDL) on high-speed diesel, which currently stands at zero compared to the Rs80 per litre target in the federal budget. Butt emphasized that reintroducing the levy now would significantly increase diesel prices, impacting the economy. Diesel is crucial for Pakistan’s freight and agricultural systems, and rising transport costs have already affected the prices of flour, fertilizer, and other essentials.

The timing of the proposed policy shift is particularly challenging as the wheat harvest season approaches. Increased fuel costs could lead to higher food prices, as combine harvesters, threshers, irrigation pumps, and trucks transporting grain all rely on high-speed diesel. Public transport operators have already raised fares by up to 35 percent, affecting low-income commuters.

Pakistan’s reliance on oil imports, which account for nearly 80 percent of its needs, makes the economy vulnerable to global price fluctuations. The recent surge in international energy prices has increased import costs, weakened export competitiveness, and intensified pressure on Pakistan’s external accounts. The World Bank reported that Pakistan’s poverty rate reached 40.5 percent in fiscal year 2024, while the Benazir Income Support Program only partially supports vulnerable households.

Butt urged the government to negotiate with the IMF for flexibility to temporarily retain targeted diesel relief during the harvest season. He argued that rigid fiscal targets should not apply when external conflicts, rather than domestic policy failures, drive the economic shock.