Amid an ongoing economic crisis, prices of petroleum products in Pakistan were notified by the country’s finance minister on Tuesday.
According to Ishaq Dar, the prices will be effective from March 1 to March 15, 2023.
In a tweet, Drar said the price of MS (Motor Spirit) petrol has undergone a Rs 5 deduction and will now cost Rs 267 per litre.
The price of kerosene oil in Pakistan has been reduced by Rs 15 and will now cost Rs 187.73 per litre, the finance minister said.
Similarly, light diesel oil, with a reduction of Rs 12, will now cost Rs 184.68 per litre.
Further, Pakistan’s Finance Minister Drar said there were no changes in the prices of high-speed diesel, which costs Rs 280 per litre.
PAKISTAN’s ECONOMIC CRISIS
Pakistan faces a wave of problems on multiple fronts, but its growing debt can no longer be overlooked as inflation soars and foreign reserves crumble. Intense floods not only inundated Pakistan’s land but drowned its fragile economy just as it was recovering from the Covid-19 pandemic.
According to a new study by the Asian Development Bank Institute, the country’s debt has become unsustainable.
Pakistan’s external debt and liabilities are almost USD 130 billion – 95.39 per cent of its GDP.
The cash-strapped country has to return almost USD 22 billion over the next 12 months – a total of USD 80 billion in the next three-and-half years – when its reserves are only at USD 3.2 billion and its economic growth rate a mere 2 per cent.
Now the country spends almost half of its federal budget on debt servicing.
Although the Pakistani government has implemented measures to reduce the debt burden, including fiscal consolidation, privatisation of state-owned enterprises and reforms to the tax system, it is not enough in the backdrop of skyrocketing inflation.
Inflation is at its highest in 48 years, currently sitting at 27.6 per cent. In January 2023, food inflation reached 42.9 per cent compared to 12.8 per cent last year, leaving millions struggling for their daily meals.
The central bank has also raised interest rates to 17 percent, choking business activities and economic growth.
To cope, Pakistan continues to develop a dependency on aid and loans, including 22 International Monetary Fund programs.
According to the United Nations Development Program calculations, Pakistan’s spending habits are at 6 per cent of GDP or USD 17.4 billion on elite privileges in the form of cheap input prices, tax breaks or preferential access to land and services to feudal landlords, the corporate sector, powerful military members and the political class.
It is also (mis)spending between 8 to 12 per cent of its GDP every year on its loss-making state-owned enterprises, according to the World Bank report, Hidden Debt.
Meanwhile, Pakistan’s tax system is also regressive – burdening low-income taxpayers – and more than half of its taxes are indirect.
The agriculture sector is not taxed properly and agri-based products account for 60 to 70 percent of the country’s exports yet its share in tax is only 0.02 per cent.
(With inputs from PTI)