Introduction
Good news for Pakistani consumers! Petrol – Diesel prices in Pakistan are expected to drop by Rs. 18 per liter for petrol and may fall below Rs. 300 per liter for diesel on 1st November 2023, providing much-needed relief to households and businesses alike. This comes as a welcome respite after months of rising fuel prices, which have taken a toll on the country’s economy.
Factors Contributing to the Price Drop
There are a number of factors contributing to the expected price drop in petroleum products. One of the most significant factors is the recent decline in global crude oil prices. Crude oil prices have fallen by over 20% in recent months, due to a number of factors including a slowdown in global economic growth and increased supply from the United States.
Another factor contributing to the price drop is the appreciation of the Pakistani rupee against the US dollar. The rupee has appreciated by over 5% against the dollar in recent months, due to a number of factors including increased foreign investment and remittances.
Impact of the Price Drop
The expected drop in petrol – diesel prices in Pakistan is likely to have a positive impact on the Pakistani economy. It will reduce the cost of transportation and logistics, which will benefit businesses and consumers alike. It will also help to reduce inflation, which has been a major concern for the Pakistani government in recent months.
Revenue Implications
The expected drop in petroleum prices will also have an impact on the government’s revenue. Petroleum levy (PL) is a major source of revenue for the government, and the lower fuel prices will lead to a decrease in PL collections. However, the government has already collected Rs. 222 billion in PL in the first quarter of the fiscal year, which is more than half of its annual target. Additionally, the government has also imposed a number of other taxes on petroleum products, such as general sales tax (GST) and withholding tax (WHT), which will continue to generate revenue even if fuel prices fall.
Conclusion
The expected drop in petroleum prices is a welcome development for Pakistani consumers and businesses alike. It is likely to have a positive impact on the country’s economy and help to reduce inflation. However, the government will need to carefully manage its finances to ensure that the lower fuel prices do not lead to a significant budget deficit.
