Fuel Subsidy • IMF
The IMF Has No Issue With Pakistan’s Rs 100 Per Litre Fuel Subsidy. PM Shehbaz Said So at the UN General Assembly. Here Is What That Really Means and Why It Matters
24 September 2026
Prime Minister Shehbaz Sharif said on Wednesday that the International Monetary Fund has no serious concerns about Pakistan’s targeted Rs 100 per litre petrol subsidy for motorcycles, rickshaws and small cars, after he met IMF Managing Director Kristalina Georgieva on the sidelines of the 81st United Nations General Assembly in New York. The IMF’s no-objection is significant because the subsidy was launched on 13 September without prior IMF consultation, and the federal government had been at pains to frame the scheme as a targeted, technology-delivered relief rather than a general fuel price cut. The IMF’s endorsement, even an informal one, reduces the risk that the subsidy becomes a friction point in the forthcoming programme review.
What PM Shehbaz said
Speaking to The Express Tribune after the meeting with Georgieva, PM Shehbaz said he had briefed the IMF managing director in detail on the pressure Pakistan faces from rising global petroleum prices and on the difficulties confronting low-income people. “We drew the IMF chief’s attention to the question of where the poor man would go,” the prime minister said. He added that the targeted subsidy was being distributed through a “comprehensive and transparent mechanism”.
The “comprehensive and transparent mechanism” framing is the key. The Rs 100 per litre subsidy is delivered through a digital token system managed by the Ministry of Information Technology and Telecommunication in coordination with NADRA, the four provinces, Azad Jammu and Kashmir, Gilgit-Baltistan, and the telecom operators. The token system uses the existing NADRA CNIC database for identity verification, the provincial transport databases for vehicle verification, and the telecom SMS network for delivery. This is precisely the kind of targeting the IMF has historically favoured over general subsidies, which are typically less progressive and more distortionary.
What Georgieva said
In a post on X following the meeting, the IMF managing director said continued reforms will help lift Pakistan’s growth and improve people’s lives. The full text of her post was: “I had the opportunity to meet with Prime Minister [Shehbaz] on the margins of #UNGA to discuss Pakistan’s reforms. Strong implementation has helped preserve stability, restore confidence and regain market access. Continued reforms will help lift growth and improve people’s lives.”
The post did not explicitly mention the fuel subsidy, but the broader signal — that the IMF is comfortable with the federal government’s policy direction — is the relevant read. The meeting also covered the forthcoming IMF programme review, the federal government’s reform implementation, and Pakistan’s external financing outlook. PM Shehbaz thanked the IMF for its continued support and reaffirmed his government’s “unwavering commitment” to the IMF-supported reform programme.
Why the IMF’s no-objection matters
The IMF’s acceptance of the subsidy matters for three reasons.
Reason 1: Targeted subsidies are IMF-approved; general subsidies are not
The IMF has historically been sceptical of general fuel price subsidies in Pakistan and other developing countries. The argument is that general subsidies are fiscally expensive, benefit the wealthy disproportionately, distort consumption, and undermine the fiscal base. The IMF has pushed Pakistan multiple times over the past decade to reduce or eliminate general fuel subsidies, and to shift to targeted support for vulnerable households.
The Rs 100 per litre scheme is precisely the kind of targeted support the IMF has favoured. The eligibility is narrow: motorcycles, rickshaws, Qingqi rickshaws, and cars up to 800cc. The quota is capped: 20 litres per month for two- and three-wheelers, 30 litres per month for small cars. Diesel is excluded. The delivery is digital and verifiable. The total fiscal cost, estimated by the Petroleum Division at roughly Rs 75 billion per year at full utilisation, is meaningfully smaller than the cost of a general Rs 100 per litre cut on all petrol consumption.
The IMF’s no-objection confirms that the scheme is read as a targeted relief, not as a back-door general subsidy.
Reason 2: It reduces friction in the forthcoming programme review
The next IMF programme review is expected in October or November, and the review will cover fiscal performance, external financing, and structural reform implementation. The Rs 100 per litre subsidy was a wild card going into the review. With the IMF’s no-objection, the subsidy is less likely to become a friction point. The federal government can now go into the review with a clearer story: the subsidy is targeted, technology-delivered, time-limited, and accepted by the IMF.
Reason 3: It sets a precedent for future targeted relief
The IMF’s acceptance of the Rs 100 per litre subsidy sets a precedent for future targeted relief schemes. If the global crude price stays above $100 a barrel, the federal government is likely to face pressure to expand the subsidy or to introduce similar targeted relief in other sectors. The IMF’s no-objection gives the government more policy space to do so without disrupting the IMF programme.
What the subsidy does for households
For households, the practical effect of the subsidy is unchanged from when the scheme was launched on 13 September. The current petrol price is Rs 375.82 per litre. Eligible consumers — motorcycle, rickshaw, Qingqi and small-car owners — pay an effective Rs 275.82 per litre within the quota. The maximum monthly benefit is Rs 2,000 for two- and three-wheelers (20 litres × Rs 100) and Rs 3,000 for cars up to 800cc (30 litres × Rs 100). The benefit is delivered as a discount at the pump, not as a cash transfer.
The subsidy is delivered through the SMS-based digital token system: register by sending REG to 9771, then send TOK before each fill-up to receive a fuel token. The token is verified at the pump, and the subsidy is deducted from the price. The rollout was staged: Islamabad on 15 September, nationwide on 17 September. The implementation is now in full swing.
For households that have already registered and are using the subsidy, the IMF’s no-objection removes the risk that the scheme could be wound back under IMF pressure in the programme review. The subsidy is now on more secure footing.
What the IMF’s no-objection does not mean
It is important to be clear about what the IMF’s no-objection does and does not mean. The IMF has not formally approved the subsidy. The IMF’s no-objection is an informal acceptance communicated in a meeting between the prime minister and the IMF managing director, supported by a positive social-media post from Georgieva. The formal programme review, which will take place over several weeks in October or November, will involve detailed scrutiny of the subsidy design, the targeting mechanism, the fiscal cost, and the impact on the budget and the current account.
The IMF’s no-objection does not mean the subsidy can be expanded without consequence. The fiscal cost of the subsidy is estimated at Rs 75 billion per year at full utilisation. The IMF’s no-objection is conditional on the subsidy remaining narrowly targeted, technology-delivered, and time-limited. An expansion of the subsidy — to diesel, to larger cars, or to general consumption — would likely trigger IMF concerns.
The bottom line
PM Shehbaz said on 24 September at the UN General Assembly that the IMF has no serious concerns about Pakistan’s Rs 100 per litre fuel subsidy for motorcycles, rickshaws and small cars. The IMF’s no-objection was communicated in a meeting between the prime minister and IMF Managing Director Kristalina Georgieva, and supported by a positive social-media post from Georgieva. The no-objection is significant because the subsidy was launched without prior IMF consultation, and because the federal government had been at pains to frame the scheme as targeted, not general. The IMF’s no-objection reduces the risk of friction in the forthcoming programme review and gives the federal government more policy space to introduce similar targeted relief in the future. For households, the practical effect is that the subsidy is now on more secure footing.
What people are asking
Has the IMF approved Pakistan’s Rs 100 per litre fuel subsidy?
The IMF has not formally approved the subsidy, but PM Shehbaz said on 24 September that the IMF has no serious concerns. The IMF’s no-objection was communicated in a meeting between the prime minister and IMF Managing Director Kristalina Georgieva on the sidelines of the UN General Assembly in New York, and was supported by a positive social-media post from Georgieva on Pakistan’s reforms.
Why does the IMF’s no-objection matter?
It matters because the subsidy was launched without prior IMF consultation, and the federal government had framed the scheme as targeted, not general. The IMF has historically been sceptical of general fuel subsidies but has accepted targeted support for vulnerable households. The no-objection validates the targeting framing and reduces the risk of friction in the forthcoming programme review.
What is the IMF programme review?
The IMF programme review is a periodic assessment of Pakistan’s compliance with the IMF-supported reform programme. The review covers fiscal performance, external financing, structural reform implementation, and the impact of new policy measures. The next review is expected in October or November 2026.
What is the fiscal cost of the Rs 100 per litre subsidy?
The Petroleum Division’s initial estimate places the fiscal cost at roughly Rs 75 billion per year if the scheme runs at full utilisation across the eligible fleet. The actual cost in the first few months is likely to be lower as not all eligible vehicles will register immediately.
Will the subsidy continue after the IMF programme review?
The IMF’s no-objection makes it more likely that the subsidy will continue. The subsidy is now on more secure footing. The federal government has framed the subsidy as a temporary relief tied to the current oil price shock, and the IMF’s acceptance of that framing supports the continuation of the subsidy through the current shock.
Who is eligible for the subsidy?
Motorcycles, rickshaws, Qingqi rickshaws, and other two- and three-wheelers are eligible for the subsidy on up to 20 litres per month. Cars with engine capacities up to 800cc are eligible on up to 30 litres per month. Diesel vehicles, larger cars, and commercial freight vehicles are not covered.
How do I register for the subsidy?
Send an SMS in the format REG [CNIC without dashes] [vehicle number without spaces or dashes] [provincial code] [vehicle registration date] to 9771. The SIM must be registered in your own name. After registration, send TOK to 9771 before each fill-up to receive a fuel token.
Could the subsidy be expanded?
The IMF’s no-objection gives the government more policy space to expand the subsidy if needed. But the IMF’s acceptance is conditional on the subsidy remaining narrowly targeted, technology-delivered, and time-limited. An expansion to diesel, to larger cars, or to general consumption would likely trigger IMF concerns.
