Petroleum Levy Soars to Record High Under PDM Government, Amidst Economic Challenges

Petroleum Levy Soars to Record High Under PDM Government, Amidst Economic Challenges

In a recent revelation by Pakistan’s Ministry of Finance, the previous government, led by the Pakistan Democratic Movement (PDM), which comprised several prominent political parties, has left the nation grappling with a staggering burden of Rs 452 billion due to the imposition of a petroleum levy during the fiscal year 2022-23. This unprecedented financial load has raised concerns among citizens and policymakers alike.

READ MORE: Pakistan Poised for Possible Petroleum Price Hike Amid Rupee Depreciation

Official data released by the Ministry of Finance indicates that during the fiscal year 2022-23, the government collected a staggering Rs 580 billion from the petroleum levy, compared to a mere Rs 127.53 billion in the previous year. This alarming increase of 355 percent has raised questions about the financial management strategies of the previous government.

The PDM government assumed control of the treasury in April 2022 following a successful vote of no confidence against the then Prime Minister Imran Khan. This move was driven by concerns over mismanagement and high inflation during his tenure. Shehbaz Sharif of the Pakistan Muslim League (PML-N) was subsequently elected as the Prime Minister, with promises to steer the country towards economic prosperity.

READ MORE: Inevitable Petroleum Price Hike Looms for Pakistan in Early September 2023

However, despite his commitment to alleviating inflationary pressures, Prime Minister Shehbaz Sharif faced significant challenges, including soaring prices of petroleum products and a depreciating local currency. These factors contributed to record-high inflation levels during his tenure, leaving citizens struggling with the rising cost of living.

Looking ahead, Pakistan has set an ambitious target of generating approximately Rs 870 billion through the petroleum levy in the upcoming fiscal year 2023-24, as revealed by budget documents. This ambitious goal reflects the government’s determination to bolster revenue despite the persistent challenges in the petroleum sector.

READ MORE: Pakistan State Oil Records a Drastic 93% Drop in Annual Net Profit

In a twist of events, the caretaker government assumed office on August 14, 2023, following the completion of the legislative assembly’s tenure on August 9, 2023. Notably, the caretaker government’s first announcement included a revision of petroleum prices, leading to increased rates for petrol and diesel. The imposition of additional petroleum levies may further exacerbate the economic burden on the already strained populace.

As Pakistan navigates its economic challenges and prepares for general elections under a caretaker government, the issue of petroleum levies remains a contentious topic. Balancing revenue generation with the welfare of the citizens will undoubtedly be a top priority for the nation’s leaders in the months to come.