ISLAMABAD: The government will not increase the petroleum development levy (PDL), but pass on the impact of increase in oil prices, as a result of the ongoing conflict in the region directly to consumers.
This was stated by Secretary Finance while briefing the National Assembly Standing Committee on Finance and Revenue which met with Naveed Qamar in the chair here on Monday. The government has targeted to collect Rs1.486 trillion from PDL in fiscal year 2025-26.
Finance Minister Aurangzeb also endorsed secretary finance’s statement while saying that they are very decisive in this regard and not going to wait for the decision to be made. We did this yesterday, he added.
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Amid geopolitical tension in the Middle East, former energy minister Omar Ayub Khan warned that the ongoing Iran-Israel conflict could disrupt global oil supply routes, particularly through the Strait of Hormuz, driving up international prices and inflating Pakistan’s current account and fiscal deficits. “Iran is the world’s sixth-largest oil producer—any disruption will hit us hard,” he cautioned.
Aurangzeb confirmed that the prime minister has formed a high-level committee to assess the situation. The committee chaired by finance minister reviewed the country’s petroleum reserves and pricing in light of escalating tensions in the Middle East following the recent Israeli strikes on Iran.
The meeting, held in Islamabad, examined the impact of fluctuating global oil prices driven by the geopolitical developments in the region. Officials from the Ministry of Finance and Petroleum Division were in attendance.
According to a statement issued by the Ministry of Finance, the committee expressed satisfaction over the current availability of petroleum products, stating that the country holds sufficient reserves and faces no immediate threat of a supply crisis. However, the committee stressed the need for vigilant monitoring of international developments and their potential economic repercussions. In view of the evolving situation, a working group has been formed to assess market conditions on a daily basis.
“The committee will convene on a weekly basis and present its recommendations to the prime minister,” the statement said, adding that the Petroleum Division has been assigned the role of secretariat to facilitate timely coordination and reporting.
The secretary finance told the committee that government borrowing has decreased to Rs1.32 trillion compared to Rs4.22 trillion during the same period last fiscal year showing a decline of Rs2.9 trillion. Replying to another question regarding pay and pension of armed forces, the secretary finance told the committee that for fiscal year 2026, pay is Rs846 billion, of which, Rs363.78 billion is basic while Rs482.22 billion are allowances. Pension expenditure for fiscal year 2026 is Rs742 billion.
The secretary finance told the committee that significant change in government debt securities yield curve between July 2024 and June 2025 reflects a positive market sentiment, driven by effective policy measures and improved macroeconomic fundamentals. Sharp declines in short-term yields — such as a 9.44 percentage point drop in the 1-month tenor and 9.05 points in the 3-month, 7.79 percent in one year, 3.53 percent in five year and 1.92 percent in 10 year, signal successful inflation management, achieved through coordinated fiscal consolidation resulting in declining interest rate.
Copyright Business Recorder, 2025
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