LAHORE: Chairman Businessmen Panel (BMP) Mian Anjum Nisar has said that Pakistan’s economy will most likely be faced with tougher challenges in the second half of the current fiscal year as it remains heavily dependent on imported fuel oil whose prices are steadily on the rise. Pakistan’s annual inflation climbed to 4.4 per cent in January from 3.7 per cent in the same month last year mainly due to hike in petroleum prices
In a statement issued here on Sunday, Mian Anjum Nisar said good days seem to be over as second half’s (January-June 2018) import bill will be significantly higher than the first half of the current fiscal year 2017-18. He informed that petroleum goods remain heavily taxed to make up a significant chunk of the revenue collected by the government.
The BMP chairman said high oil prices mean that Pakistan’s export competitiveness goes down which is something the country cannot afford. It also raises questions about the decision to depreciate the Pakistani rupee. The logic of depreciation was to make the export sector more competitive but in an import-dependent economy, depreciation is likely to increase domestic prices by a similar amount. The petrol price had to go up simply because the value of Pakistani currency has gone down and petrol is an imported good. The only way to control its price is to reduce the tax charged to consumers.
BMP Secretary General Ahmad Jawad further said the country’s energy import bill has already risen heftily as global oil prices have spiked by almost a third in the last several months. “It’s likely to increase considerably going forward.”
He told rising oil prices will add pressure on the country’s foreign exchange reserves, widen trade gap as import bill increases, push domestic power prices, increase the already high cost of doing business affecting export competitiveness, expand budget deficit, spike inflation and squeeze household incomes.
“It is not good news for Pakistan…whenever oil goes up our economy tanks,” Jawad concluded.