- Associated Press - Thursday, January 6, 2011

ISLAMABAD (AP) — The Pakistani government said Thursday it will reverse unpopular fuel price hikes that helped spark the breakup of the governing coalition, an apparent attempt to prevent the government from collapsing at a time of growing turmoil in the country.

The move came as the ruling Pakistan People’s Party is reeling from the assassination of an outspoken liberal governor by one of his bodyguards who told officials during his first court statement he was proud of the murder and saw it as his religious duty.

It is not clear whether the government’s decision on fuel prices, which were increased up to 9 percent on New Year’s eve, will lure back the second-largest member of the ruling coalition, the Muttahida Qaumi Movement.

The MQM said anger over the price hikes spurred its defection to the opposition, but analysts have said it may want other concessions as well. The party’s defection deprived the PPP of a majority coalition in parliament, plunging the country into political turmoil at a time of severe economic troubles and relentless militant attacks.

The decision to back down on the fuel price hikes could cause problems with the International Monetary Fund, which has demanded that Pakistan reduce its deficit if it wants to continue receiving billions of dollars in loans that have helped keep its faltering economy afloat.

“It was a difficult task, an impossible one,” Prime Minister Yousuf Raza Gilani told parliament when he announced the move to reduce prices. “But your consultation and consensus made it possible.”

Mr. Gilani spoke several hours after Mumtaz Qadri, the 26-year-old accused of assassinating Punjab province Gov. Salman Taseer, appeared in a court just outside Pakistan’s capital to deliver his confession.

Mr. Qadri, who purportedly shot Mr. Taseer more than 20 times in the back outside a restaurant in Islamabad, told the court that he acted after the governor criticized Pakistani laws that mandate the death sentence for anyone who insults Islam.

“I am proud of it,” Mr. Qadri was quoted as saying by his defense lawyer, Saimul Haq Satti. “There is no other use of my life but to sacrifice it for the sake of the Prophet Muhammad.”

Associated Press writer Asif Shahzad contributed to this report.