Rising tariffs

The hike will further erode the purchasing power of the average Pakistani and squeezing household budgets

The implementation of a 67% increase in the natural gas tariff, effective from February 1, and a hike in petrol and diesel prices come at a time when Pakistan is already grappling with numerous challenges, including high inflation, political turmoil and economic uncertainty. These price hikes will undoubtedly exacerbate the financial burden on consumers and businesses, leading to increased costs of living, transportation and production.

This sharp escalation in tariffs and fuel prices is likely to have a cascading effect, further eroding the purchasing power of the average Pakistani and squeezing household budgets. These increases also have significant implications for the overall economy, particularly in terms of their impact on consumer spending and business operations. A spike in gas tariffs and fuel prices will contribute to inflationary pressures, making it more challenging for the central bank to maintain price stability, while the increased cost of production and transportation will likely lead to higher prices of goods and services. Furthermore, the government’s reliance on petroleum levy, which has already reached the maximum permissible limit of Rs60 per litre, indicates a heavy dependence on indirect taxation and a lack of more sustainable fiscal policies. While the government has collected a substantial amount in petroleum levy during the first half of the fiscal year, it remains to be seen how this revenue will be utilised and whether it will be directed towards addressing the pressing needs of the economy and society.

In light of these developments, it is imperative for the government to adopt a more transparent and consultative approach to decision-making, especially when it comes to matters that directly impact the daily lives and livelihoods of the people. There is a need for greater accountability and public engagement in the policymaking process, ensuring that decisions are made in the best interests of the country and its citizens.

Published in The Express Tribune, February 18^th, 2024.

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