Pakistan government reverses unpopular fuel price rise

Pakistan's government has rolled back a recent fuel price rise, in an apparent concession to the opposition after losing its majority in parliament.

The 9% rise in the price of petrol and kerosene was described as "unbearable" by the Muttahida Quami Movement (MQM) when it quit the government on Sunday.

Prime Minister Yusuf Raza Gilani was later told by the opposition to reverse the rise or face a confidence vote.

He is struggling to push through tough economic policies demanded by the IMF.

The government has already had to delay the implementation of a reformed general sales tax (RGST), which was a condition of the IMF for the release of the next tranche of an $11bn loan agreed in 2008.

The political crisis comes as Pakistan struggles to cope with the aftermath of the devastating summer floods, which caused $10bn in damage, and to quell a worsening Islamist insurgency.

On Tuesday, the governor of Punjab province, Salman Taseer, was assassinated while in Islamabad. His bodyguard is said to have confessed to killing Mr Taseer because of his opposition to blasphemy laws.
'Difficult task'

In a speech to the National Assembly on Thursday, Mr Gilani said fuel prices would be restored to the levels they were on 31 December.
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The prime minister bowed to the demand of this parliament, which is a big act and it is about bowing to the difficulties of the people of Pakistan”

End Quote Chaudhry Nisar Ali Khan PML-N leader in the Natinoal Assembly

"All the political leadership has agreed that fuel prices should be reversed," he added. "It was a difficult task, an impossible one. But your consultation and consensus made it possible."

The reversal was one of several demands made by former Prime Minister Nawaz Sharif's Pakistan Muslim League (PML-N) during the emergency talks with Mr Gilani's Pakistan People's Party (PPP) earlier this week.

He also wanted the implementation of a series of court verdicts against PPP officials for corruption.

Mr Sharif said his party would expel PPP members of Punjab's provincial government, which the PML-N dominates, if they were not met. He also threatened to form a united opposition front to push for an early election.

"Today, the prime minister bowed to the demand of this parliament, which is a big act and it is about bowing to the difficulties of the people of Pakistan," said Chaudhry Nisar Ali Khan, the PML-N's leader in the National Assembly, after the fuel price rise was reversed.

It is not yet clear if reversing the fuel price rise will bring the MQM back into the governing coalition.

The party's leaders have not yet commented. However, MQM lawmaker Faisal Subzwari told the Reuters news agency that while his party appreciated the decision, it would not rejoin the government.
File picture of Pakistan Prime Minister Yusuf Raza Gilani It is not clear if reversing the price rise will ensure Yusuf Raza Gilani's survival.

The MQM also cited high inflation and the PPP's general poor performance when announcing it would join the opposition.

A smaller coalition partner, the Jamiat-i-Ulema Islam party, pulled out last month after one of its ministers was sacked.

The prime minister could continue to rule with a minority coalition, but would have to step down if he lost a confidence motion. MPs would then either have to vote on an alternative candidate or request an election.

The BBC's M Ilyas Khan in Islamabad says the opposition is unlikely to call for a confidence vote, as the largest party, the PML-N, is not willing to step into the breach.

It would have to depend for support on the same groups that have deserted Mr Gilani's government, and it would be stepping in at a time when the Pakistan's economic and security challenges require unpopular decisions, our correspondent adds.

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