The price hike will instead be almost five per cent, a figure likely to disappoint the IMF which has been pressing Pakistan to raise taxes and end subsidies as part of a package of fiscal reforms. — Photo by AFP

ISLAMABAD: The government will halve a 9.9 per cent fuel price increase proposed this week, the finance minister said on Thursday, in an apparent concession to a party key to maintaining the governing coalition.

The price hike will instead be almost five per cent, a figure likely to disappoint the International Monetary Fund which has been pressing Pakistan to raise taxes and end subsidies as part of a package of fiscal reforms.

Implementing these reforms is a condition for the IMF to disburse an $11 billion IMF bailout program to Pakistan.

“This has been decided and we will formally notify it after getting approval from the prime minister,” Finance Minister Hafeez Shaikh told reporters after meeting representatives of the Muttahida Qaumi Movement (MQM), one of the biggest parties in the coalition government.

“It means we (the government) have to bear more burden.”

The MQM, which in January forced the government to reverse a similar rise in fuel prices, had expressed serious concerns over the latest increase announced on Tuesday.

The party's ire rekindled concerns over the stability of the weak government — led by President Asif Ali Zardari's Pakistan People's Party — after it made unspecified threats if the government failed to reverse the latest price hike within three days.