Pakistan’s Petroleum Levy Collection Surges 45% to Rs1.2 Trillion

IMF sees stronger fiscal performance as provinces post record cash surpluses

ISLAMABAD: Pakistan’s petroleum levy collection increased sharply during the first nine months of the current fiscal year, helping the government strengthen its financial position ahead of crucial budget talks with the International Monetary Fund.

According to Beyond Time News, the federal government collected Rs1.205 trillion through petroleum levy from July to March. This marks an increase of Rs371 billion, or 45%, compared to the same period last year.

The latest figures show that petrol consumers are now paying around Rs117.5 per litre in levy charges.

Higher Petroleum Taxes Boost Government Revenue

The strong rise in petroleum levy collection almost matches the total amount collected during the entire previous fiscal year.

Economic experts say several factors helped improve Pakistan’s fiscal position. These include higher petroleum taxes, lower interest payments after major interest rate cuts, and record provincial cash surpluses.

The IMF budget mission begins discussions with Pakistan on Wednesday. However, officials say the talks will cover much more than just the federal budget.

The IMF team will also review progress on legal reforms, privatisation plans, and economic liberalisation measures.

IMF to Review Sugar Sector and Banking Reforms

According to Beyond Time News, the IMF mission will discuss proposed changes in Pakistan’s sugar sector and review efforts to reduce government involvement in state-owned enterprises.

Officials will also discuss the future of Pakistan’s banking system after the planned end of interest-based banking in 2028 under constitutional requirements.

The IMF is expected to review progress on opening the sugar sector to greater local and foreign competition.

The lender will also help set revenue and spending targets for the next fiscal year before the federal budget goes to the National Assembly for approval next month.

Provinces Generate Record Cash Surplus

The four provincial governments together generated a cash surplus of Rs1.63 trillion during the July-March period.

Punjab contributed the largest share with a surplus of Rs824 billion.

According to official figures, the overall budget deficit during the first nine months remained at Rs856 billion, equal to just 0.7% of GDP.

Lower interest expenses also helped improve the government’s financial position. Interest payments dropped by Rs1.5 trillion after significant cuts in policy rates.

Pakistan’s primary budget surplus reached Rs4.1 trillion, or 3.2% of GDP, during the period.

Read more:Petrol Price Update: Decision to Be Announced by Petroleum Ministry

IMF Projects Better Fiscal Performance

The IMF now expects Pakistan’s fiscal performance to remain stronger than earlier estimates made before regional tensions increased last year.

The government originally targeted an overall budget deficit of 3.9% of GDP for the current fiscal year. However, the IMF now projects the deficit may stay as low as 3.2% of GDP.

This improvement suggests that federal and provincial governments had some financial space available for public relief measures.

However, critics argue the government continued imposing high petroleum taxes despite rising inflation and economic pressure on citizens.

Energy Sector and Subsidy Reforms Also Under Review

The IMF mission will also examine Pakistan’s plans to reduce circular debt in the power and gas sectors.

Officials will discuss electricity and gas pricing, targeted subsidies, and reforms linked to the Benazir Income Support Programme.

According to Beyond Time News, the IMF wants Pakistan to ensure that energy subsidies remain within agreed limits in the next budget.

The government will also share updates on remittance subsidy schemes and new policies designed to improve foreign investment and competition in key sectors of the economy.