Karachi, September 16, 2023 – The business community in Pakistan has expressed deep disappointment over the recent hike in petroleum prices, which took effect on September 16, 2023.
Irfan Iqbal Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), voiced his concerns, stating that the government should have avoided increasing petroleum prices, especially given the Pakistani Rupee’s recent strengthening against the US Dollar in interbank sessions. He noted that this positive trend suggests further appreciation of the Rupee, fueled by strict measures against speculative trading in commercial banks and open markets.
Petroleum prices saw a sharp rise, with petrol jumping from PKR 305.36 to PKR 331.36 per liter, marking an 8.5% increase. Similarly, high-speed diesel prices surged from PKR 311.84 to PKR 329.18 per liter, reflecting a 5.6% hike.
The FPCCI President stressed that the government could have leveraged the Rupee’s strengthening to absorb the rising international petroleum prices, thereby shielding the economy from inflationary pressures and higher business costs.
FPCCI highlighted that in the latest interbank session, the Rupee closed at 296.85 per US Dollar, marking a significant recovery from 307.10 per Dollar on September 5. Economic analysts believe that the Rupee remains undervalued when compared to the real effective exchange rate (REER) and is expected to continue strengthening with ongoing regulatory actions.
The business community has raised serious concerns over the negative impact of rising petroleum prices on trade, industry, and overall economic stability. FPCCI has repeatedly urged the government to resolve challenges related to importing Russian petroleum, including oil cargo handling, refining processes, and commercial payment mechanisms. Despite these warnings, Pakistan has failed to capitalize on cheaper Russian petroleum, which is currently available at 40% less than global market prices.
Sheikh emphasized that FPCCI acknowledges the State Bank’s decision to maintain the key policy rate but urges the introduction of a regionally competitive export finance scheme (EFS), long-term financing facility (LTFF), and temporary economic refinance facility (TERF). The business community believes these measures are essential to stabilizing the economy, reducing business costs, and maintaining competitive balance in exports amid rising petroleum prices.