ISLAMABAD, Aug 18: The government is worried about high international oil prices owing to their inflationary impact but is hopeful that budgetary targets would not go out of hand and the prices would subside in the days ahead.
Pakistan had set budgetary targets when international oil prices hovered around $56-57 per barrel, which have now risen to $67 per barrel. The fiscal impact is likely to be met through higher-than-expected returns of the public-sector corporations like the OGDCL and PTCL.
“The international oil prices have come down today to $63 per barrel and we hope these would subside further,” Dr Salman Shah, adviser to the prime minister on finance and revenue, told Dawn on Thursday.
There has been a lot of fluctuation in the oil prices and the government is trying to absorb its impact as much as possible so that inflationary pressures remain in check, he said.
Mr Shah said the government’s oil-related revenues at present were much lower than the target but if prices came down in the days ahead it would provide some fiscal space to the government. Otherwise, it would have to be seen how to make adjustments accordingly.
When asked whether the government planned to increase domestic oil prices if international market maintained a rising trend, he said “we have not passed on the oil impact to consumers” in the last four-five fortnightly reviews and “let us see how things emerge by the end of this month”.
He said the government had still to pay some outstanding amounts to oil marketing companies and refineries for keeping a freeze on domestic prices and it had already lost another about Rs3-4 billion revenue in one and a half month of current fiscal year.
He said a lot of speculative business was going on in international oil market, which was expected to soften up. So the government would have to wait and adopt a prudent policy as the financial year progressed.
He did not agree with the suggestion that privatisation proceeds of the Pakistan Telecommunication Company Limited (PTCL) could be helpful in balancing the fiscal deficit.
