Low-Cost Petrol Scheme for Motorcycles and Small Cars Set to Be Shelved
ISLAMABAD: The government has agreed with the International Monetary Fund (IMF) to discontinue its fuel subsidy scheme, putting on hold a planned relief package for motorcycle riders and owners of small cars, according to a report by journalist Shahbaz Rana.
Pakistan and the IMF have reached a staff-level agreement on the release of a $1.21 billion loan tranche. As part of the agreement, Pakistan has agreed to immediately discontinue the fuel support scheme and improve spending in the social and health sectors, as well as the performance and governance of state-owned enterprises.
According to the report published by The Express Tribune, the IMF negotiations, led by Mission Chief Iva Petrova, were held in Karachi and Islamabad from September 23 to October 7, 2026. The discussions covered Pakistan’s 2026 Article IV consultation, the fourth review under the Extended Fund Facility (EFF), and the third review under the Resilience and Sustainability Facility (RSF).
In a statement issued after the conclusion of the talks, Petrova said the fuel support scheme should be discontinued immediately because it was costly and poorly targeted.
She said that even if oil prices rise unexpectedly in the future, any fuel support should be limited in scope and duration, targeted through existing social protection programmes and remain within the framework of the fiscal year 2027 budget.
Pakistan-IMF reach staff level agreement on $1.2 billion loan!
Pakistan and the International Monetary Fund have reached a staff-level agreement on $1.2 billion two loan tranches after Islamabad agreed to promptly phase out fuel subsidy scheme, bring improvements in social and health sector spending, and enhance governance of the state-owned companies.
https://t.co/y8K8YnRCjW— Shahbaz Rana (@81ShahbazRana) October 8, 2026
Prime Minister Shehbaz Sharif had earlier announced a three-month scheme offering a Rs100-per-litre discount on 20 litres of petrol per month for motorcycle riders and 30 litres for owners of vehicles up to 800cc. The government had allocated Rs75 billion for the initiative.
The prime minister had also met the IMF managing director in an effort to secure approval for the scheme, but the attempt was unsuccessful.
The Express Tribune had previously reported that the IMF raised serious objections to the proposed subsidy, citing its high cost and non-targeted nature. Government officials had maintained that the scheme would continue for three months despite the objections.
However, following the latest agreement with the IMF, the government will now have to revise its policy regarding the fuel subsidy scheme.
