Rising Oil Prices Could Widen Pakistan’s Fiscal Deficit, Warns PIDE
The Pakistan Institute of Development Economics (PIDE) has warned that increasing global oil prices may exacerbate Pakistan’s fiscal deficit and strain public finances.
The Pakistan Institute of Development Economics (PIDE) has warned that increasing global oil prices may exacerbate Pakistan’s fiscal deficit and strain public finances.
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According to PIDE, higher crude oil prices can trigger inflation, strengthen the US dollar, and elevate import bills. At $100 per barrel, the budget surplus could shrink significantly, while prices at $120 and $144 per barrel may intensify financial pressures further.
The institute urged the government to enhance the tax system, eliminate unnecessary expenditures, and implement digital monitoring to prevent revenue leakage. It noted that the ongoing IMF programme limits the scope for reducing the petroleum levy, emphasizing the importance of pre-emptive policies to manage oil shocks.
Prime Minister Shehbaz Sharif recently rejected proposed increases in petrol and diesel prices, announcing that the government would absorb an additional Rs56 billion to shield the public amid regional tensions.
