World Economy

Low Oil Prices Slash Pak Import Bill by 21%

Low Oil Prices Slash Pak Import Bill by 21%Low Oil Prices Slash Pak Import Bill by 21%

The prices of crude oil have crashed and stand at $42 per barrel in the international market, one of the lowest in the last eight years, which will have a far-reaching impact on Pakistan’s struggling economy.

Top economic managers believe that Pakistan’s oil import bill would go down by $3 billion during the current fiscal year 2015-16 if the prices of crude oil remain in the range of $40 to $50 per barrel in the international market, helping the country to overcome the balance of payment crisis in the medium term, AAP reported.

The country’s oil import bill was slashed down by 21.3% as it was reduced to $11.7 billion in the last financial year 2014-15 against $14.9 billion in the same period of the previous fiscal year 2013-14.

“We have assessed that the same situation will continue to prevail that will help the country in savings over $3 billion on balance of payments position,” said the sources.

The reduction in oil prices will have a positive impact on the overall inflationary pressures in months ahead.

While the sharp and continuous decline in oil prices is although a good omen for the overall economic situation of the country like Pakistan, the Federal Board of Revenue will not be happy on this emerging proposition. In the last financial year, the FBR had to face over Rs200 billion ($1.96 billion) revenue shortfall mainly because of reduction in oil prices which was partially offset by raising the tax rates mainly in the shape of general sales tax.

Now this time again the government is contemplating different options and is highly likely to partially pass on the benefits to consumers but it will adopt a strategy to hike the tax rate in order to compensate its losses on account of FBR’s revenue shortfall.