Pakistan imposes carbon tax to raise funds

ISLAMABAD, Pakistan, July 2 (UPI) -- Pakistan imposed a carbon tax and raised fuel prices by 12 percent in what Islamabad says is a reflection of the recovery in global prices for crude oil.

Islamabad said the 12-percent increase reflected the rise in the price of a barrel of crude oil, which has nearly doubled since falling below $40 in December.

The move sparked criticism from the Pakistani people in the wake of a $7.6 billion loan from the International Monetary Fund to boost the national economy. The IMF linked the loans to Pakistan removing subsidies on energy, the Financial Times reports.

The price increase follows a decision to impose a carbon tax on fuels. Asim Hussain, the top energy adviser to Islamabad, said the carbon tax could bring as much as $1.5 billion to government coffers in the current fiscal year, which began Tuesday.

The abolished energy subsidy would have brought $1.6 billion to Islamabad.

Analysts say the moves by Islamabad to shore up the economy will do little to stave off inflation, though the Pakistani government predicts inflation will dip below 10 percent in the new fiscal year.