KARACHI: Due to a 20% drop in oil prices in the global market, Pakistan’s oil import bill will also come down substantially, which will not only stabilize the foreign exchange reserves but also help in timely international payments. The positive effects of which will soon affect the economy.
This has been expressed in a report published by Jahangir Siddiqui Global. According to JS Global, the price of crude oil in the world market has decreased by 20% and the price of crude oil has reached the level of 72 dollars per barrel compared to five months ago in April 2024 the price of crude oil was 91 dollars 17 cents per barrel. So far it has dropped by 20%.
Due to the fall in oil prices in the world market, the government of Pakistan got an opportunity and increased the tax imposed on petroleum products i.e. Petroleum Development Levy by another ten rupees to 70 rupees per liter so that during the current financial year one trillion 28 billion rupees revenue target could be facilitated.
According to Umbreen Sorani, head of research at JS Global, a $5 per barrel drop in crude oil prices would reduce Pakistan’s annual oil import bill by $900 million, resulting in 35 basis points in inflation. further declines and this in turn gives the government room to increase PLD further to maintain fiscal balance.
He further said that the reduction in the current account deficit during August is at the lowest level in the last eleven months, while during the first two months of the current financial year, there was a decrease of 4%. If so, the main reasons for this are prioritization of primary imports and lack of demand due to the current economic situation.
In his report, Umbreen Sorani said that due to the reduction in the oil import bill, the current account deficit is estimated to be $800 million, which is 0.2 percent of the gross national product, while $900 million There will also be an annual saving, which is about 10 percent of the foreign exchange reserves due to the central bank, which currently stands at $9.4 billion.
According to the report, as a result of reduction in export bill and stabilization of foreign exchange reserves, the government will have the facility of importing goods for the next two months. In the report, Ambreen Sorani says that the inflation rate is expected to remain around 9 percent during the current fiscal year 2025.
