The Businessmen Panel of FPCCI has apprehended 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 3.7pc in the same month last year mainly due to hike in petroleum prices.
Chairman BMP, 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. Petroleum goods remain heavily taxed to make up a significant chunk of the revenue collected by the government and that tantamount to economic murder of the country. Nisar said high oil prices mean that Pakistan's export competitiveness goes down and our exports already falling, this is something the country can ill 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.
Secretary General (Federal) BMP, Ahmad Jawad added that 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 Business Recorder that rising oil prices will add to pressure on the country's forex reserves, widen trade gap as we spend more on the energy import bill, push domestic power prices, increase the already high cost of doing business affecting export competitiveness, expand budget deficit, spike inflation and squeeze household incomes.
Jawad also added "It is not good news for Pakistan whenever oil goes up our economy suffers, as rising prices have socio-political consequences in an election year." The economy needed tough decisions but successive governments failed to take unpopular measures for long term, developing and restructuring the economy, so that it could face the shock of rising crude oil prices."
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