Petroleum Levy Set at Rs 1.676 Trillion as IMF Links

The government expects Rs 1.676 trillion from the petroleum levy this year and signals it may raise the rate after a crisis-era cut. The levy remains tied to IMF-linked revenue targets. The Government has grown to rely on the petroleum levy to meet its international commitments The government hopes to collect Rs 1.676 trillion this year in the petroleum levy, assuming an average of Rs 50 per litre, The levy had to be lowered during the present crisis, to avoid too much hardship for the consumer, but it has tp bring it back to the higher level. Though Petroleum Minister Ali Pervaiz Malik did not say so in his written reply tp a question in the National Assembly, it levy will probably have to be raised to compensate for the period it remained below Rs 80 per litre. \\\mr \mslik said more than once that the levy had to be maintained so as to 'meet international commitments', which is shorthand for fulfilling IMF conditionalities. What became apparent is th e government is relying on this levy to help meet its financial targets. With the total budget outlay for FY27 pitched at Rs 18.87 trillion, the petroleum levy estimated ist almost 10 percent of this. The government has thus placed itself in a false position, It finds itself too dependent on the ley as a revenue stream to be able to get rid of it easily, even though now it serves no purpose other than to help the government achieve the revenue targets set for it by the IMF. The levy is not supposed to loom so large on the horizon of the government, being meant solely as a sort of fiscal flywheel the government could use to keep the fuel price stable. Stability has long gone out of the window, and the government has found that it cannot get rid of the levy, even though removing it would mean one of the reductions in the fuel price that it seeks so anxiously. The reduction that was carried out in diesel prices by negotiating with the refineries shows how eager the government is to find some way of easing the pressure on the consumer. Fuel prices not only affect the consumer directly, but because they are an input in transport.The aim of the most recent Jamat Islami protest, the total removal of the petroleum levy, is thus apparently logical, but also impossible to achievement, because of those same 'internatioanal commitments' the government hides behind. The federal government also probably has no objection to the fact that it keeps the entire proceeds of the levy, which does not form part of the Federal divisible pool.