Pakistan hikes petrol price by 22.20 rupees a litre - finance ministry

A country-wide power breakdown, in Peshawar
People wait for their turn to get fuel at a petrol station, a day after a country-wide power breakdown, in Peshawar, Pakistan, January 24, 2023. REUTERS/Fayaz Aziz

Feb 16 (Reuters) - Pakistan has hiked the price of petrol by 22.20 rupees ($0.0835) a litre to 272 rupees ($1.02) effective on Thursday because of the plummeting value of the country's currency, the finance ministry said in a statement.

The Pakistani rupee has fallen sharply against the dollar since an artificial cap on the local currency was removed last month to allow its value to be decided by a market-based exchange rate.

The South Asian country is locked in negotiations with the International Monetary Fund (IMF) for the release of critical bailout funds, and with roughly enough reserves to meet only three weeks of imports, Pakistan is looking to increase revenue despite multi-decade high inflation of 27%.

Pakistan laid a supplementary finance bill before parliament on Wednesday, proposing to raise the goods and services tax (GST) to 18% from 17% to help raise 170 billion rupees ($639.70 million) in extra revenue during the fiscal year ending in July.

The finance bill also proposed to raise taxes on luxury items to 25%, while hikes in taxes on first- and business-class air travel, cigarettes and sugary drinks were also proposed.

High speed diesel will now cost 280 rupees a litre after an increase of 17.20 rupees, the finance ministry said. Kerosene and light diesel oil prices were increased as well.

($1 = 265.7500 Pakistani rupees)

Reporting by Sudipto Ganguly in Mumbai; Editing by Tom Hogue and Christian Schmollinger

Our Standards: The Thomson Reuters Trust Principles.