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Pakistan

'God sent' gift of drop in oil prices to improve Pakistan’s economic indicators: Babar  

Prime Minister Imran Khan has suggestions from various ministries, on how to capitalize on this ‘low price environm
10 Mar 2020
  • Prime Minister Imran Khan has suggestions from various ministries, on how to capitalize on this ‘low price environment’.
  • The advisor was of the view that this ‘artificially low price’ will not work in the long run, so Pakistan needs to take its full advantage at the earlies

The drop in oil prices in the global market would bring in positive developments for Pakistan economic indicators, alongside a further reduction in POL rates and inflation control, said Special Assistant to the Prime Minister on Petroleum Nadeem Babar.

Talking to a private channel, Babar informed that Prime Minister Imran Khan has suggestions from various ministries, on how to capitalize on this ‘low price environment’. “We are very confident that the inflationary trend would decrease, which would be followed by a drop in the interest rate that will give us a significant economic boost,” he said.

The advisor was of the view that this ‘artificially low price’ will not work in long run, so Pakistan needs to take its full advantage at the earliest and is in the process to implement a hedging strategy. “Suppliers would also cut their production to strengthen price, whereas demand will also return into the market in few months,” he said.

Babar said that his ministry is currently working on developing a comprehensive strategy over petroleum and forward it so that necessary procedure could be adopted for approval of the summary. “You can call it an insurance policy strategy, where we are looking into call option structures,” said Babar

The advisor said that the current low prices would benefit Pakistan in its LNG purchase, and its purchase of other hydrocarbons that are linked to it. He added that the effects of current low oil prices would be evident after one month.

The development comes after oil prices tanked to a historic drop after Saudi Arabia shocked the market by launching a price war against Russia. Oil fell by almost 30pc on Monday, the most since 1991. Brent crude futures fell by as much as $14.25, or 31.5pc, to $31.02 a barrel. That was the biggest percentage drop since January 17, 1991, at the start of the first Gulf War and the lowest since February 12, 2016.

Earlier, former Minister of Finance Salman Shah has also stated that the oil prices are expected to drop in Pakistan. He was of the view that the government is in a position to announce a big relief to the public next month.