Islamabad, May 27 (IANS): In a surprise move, the Pakistan government increased the rate of petroleum products by 30 PKR per litre, or up to one-fourth of their existing prices, paving the way for reaching a staff-level agreement with the International Monetary Fund (IMF) by June 12.

The unprecedented decision will help defuse the landmines laid by the government of former Prime Minister Imran Khan on the one hand, and will save the country from looming default on the other, The Express Tribune reported.

Finance Minister Miftah Ismail made the decision public in an unscheduled news conference after Prime Minister Shehbaz Sharif gave him the go-ahead in a party meeting.

With the fresh hike, the new price of petrol will be 179.88 PKR per liter, the highest ever rate, and showing an increase of 20 per cent over the existing prices.

Ismail said that it was a "difficult decision that will erode political capital" of the government, The Express Tribune reported.

"The government was giving 56 PKR per litre subsidy and I have only reduced the loss by 30 PKR per litre," he said at the news conference.

High-speed-diesel new price will be 174.86 PKR per litre, an increase of 20.8 per cent.

Ismail said that the government was giving Rs86 per litre subsidy, and in the first batch it has reduced the subsidy amount by only 30 PKR.

"The government cannot take the country towards default and is ready to pay the political cost for the sake of protecting the interest of the state.

"There is an option whether to protect political interests of the government or save the country from default and we have decided to protect the state's interests," he added.

The government's decision to increase the prices at the expense of the political capital suggests that it might have won a nod from the establishment to stay in power longer than earlier thought.

The government had refused to take tough decisions and then call snap elections just to pave the way for the victory of the PTI.