Pakistan economy vulnerable to global shocks without reforms, experts warn
New Delhi, March 25 : Experts have warned that Pakistan’s economy remains highly vulnerable to global shocks due to its heavy reliance on imported fuel, weak external finances, and limited fiscal space, cautioning that the situation could worsen without urgent structural reforms.
However, they said that the government’s decision to sharply raise the petroleum levy on high-octane fuel is being seen as a move with some fiscal logic, as it targets a product largely used by luxury and high-performance vehicle owners, as per Dawn report.
By collecting around Rs 9 billion every month from those who can afford higher costs, the government aims to use this money to protect the wider public from rising oil prices.
It offers only temporary relief at a time when global oil prices are under pressure due to geopolitical tensions, the report stated.
The measure does little to fix deeper structural problems such as heavy dependence on imported fuel, weak external finances, and limited fiscal space, as per the report.
These challenges make the economy vulnerable to global shocks, and without reforms, the situation could worsen over time.
Finance Minister Muhammad Aurangzeb has himself acknowledged the seriousness of the situation, saying that ‘hope is not a strategy’ as the world watches ongoing tensions in the Middle East.
Even if the conflict eases, its impact on supply chains, production, and trade routes could keep oil prices high for a longer period.
Earlier measures announced by the government, such as reducing fuel allowances and introducing partial work-from-home arrangements, are also seen as limited in impact.
Analysts believe stronger steps are needed to manage energy demand more effectively, the report stated.
Ideas like early closure of markets, restaurants, and businesses -- often avoided due to political concerns -- may now need to become standard policy instead of temporary fixes.
However, they said that the government’s decision to sharply raise the petroleum levy on high-octane fuel is being seen as a move with some fiscal logic, as it targets a product largely used by luxury and high-performance vehicle owners, as per Dawn report.
By collecting around Rs 9 billion every month from those who can afford higher costs, the government aims to use this money to protect the wider public from rising oil prices.
It offers only temporary relief at a time when global oil prices are under pressure due to geopolitical tensions, the report stated.
The measure does little to fix deeper structural problems such as heavy dependence on imported fuel, weak external finances, and limited fiscal space, as per the report.
These challenges make the economy vulnerable to global shocks, and without reforms, the situation could worsen over time.
Finance Minister Muhammad Aurangzeb has himself acknowledged the seriousness of the situation, saying that ‘hope is not a strategy’ as the world watches ongoing tensions in the Middle East.
Even if the conflict eases, its impact on supply chains, production, and trade routes could keep oil prices high for a longer period.
Earlier measures announced by the government, such as reducing fuel allowances and introducing partial work-from-home arrangements, are also seen as limited in impact.
Analysts believe stronger steps are needed to manage energy demand more effectively, the report stated.
Ideas like early closure of markets, restaurants, and businesses -- often avoided due to political concerns -- may now need to become standard policy instead of temporary fixes.