Pakistan’s business and industry leaders have lambasted the Shehbaz Sharif government for raising fuel and diesel prices by Rs 30 per litre, resulting in a rise in the country’s production costs.

Zubair Motiwalla of the Chairman Businessmen Group of Pakistan (BMG) has predicted a 5-7 percent increase in manufacturing costs due to the increase in fuel prices. He went on to say that the increase in gasoline prices will have a significant impact on retail prices of commodities, making the lives of ordinary people even more wretched as the cost of living rises.

“The increase of Rs 30 per litre in petrol and diesel will be tough for consumers and industry to sustain,” stated Motiwalla.

Furthermore, he stated that the Pakistani government should have increased gasoline rates in stages.

“The government should have hiked petroleum prices in stages rather than slamming consumers and the industrial sector all at once… When the government meets the other IMF demands, such as raising power and gas tariffs, lowering circular debt, and eliminating subsidies, I expect more difficult days ahead “he stated.

The government’s decision to hike fuel prices will remove a key roadblock in the path of finalizing a staff-level deal with the International Monetary Fund.

The price increase came after talks in Doha between the Pakistani government and the International Monetary Fund. These talks were aimed at obtaining a policy agreement at the end of the IMF’s seventh assessment of Pakistan’s USD 6 billion programmes, which has been stuck since early April.

If Pakistan does not eliminate fiscally unsustainable gasoline and energy subsidies, the IMF has refused to renew the USD 6 billion programme. It had given Islamabad two days to lift the embargo in order to resume discussions.

Although the hike in fuel prices will raise inflation, it will open the path for Pakistan to receive a USD 1 billion IMF loan tranche.

It is expected that the situation might also unblock help from other multilateral and bilateral lenders, shore up foreign exchange reserves, strengthen the exchange rate, and revitalize the stock market.

In the meantime, former Prime Minister Imran Khan has criticized Shehbaz Sharif for his decision to raise the price of petroleum. Pakistan raised the price of petroleum products by PKR 30 per litre on Thursday, claiming the move was necessary to keep the International Monetary Fund (IMF) programme alive.