Govt set to raise gas prices up to 41%

The government is anticipated to implement another significant hike in gas prices, averaging up to 41%, by mid-February, as part of the ongoing $3 billion loan programme with the International Monetary Fund (IMF). This move is expected to trigger a new wave of inflation in a market already grappling with persistent price pressures. The IMF asserts that increasing gas prices is essential to curb the escalating circular debt. If realised, this would mark the second increase in fuel costs since November 2023. Analysts from Optimus Capital Management, Fabeeha Ali Khan, and Zayan Babar Khan, stated in a joint commentary that Pakistan needs to announce its effective gas price hike for December 2023 by February 15, 2024, as per the IMF conditions. According to IMF data, the circular debt in the gas sector reached Rs2.1 trillion (2.5% of GDP) by the end of FY23, showing a 28% YoY increase.