ISLAMABAD: Concerns over rising revenue shortfall - Rs 610 billion by the Federal Board of Revenue (July-March) with the petroleum levy collection not yet quantified - the government is expected to raise the levy considerably as price of petroleum and products fall in the international market following the announcement of a two-week ceasefire between the US/ Israel and Iran with talks scheduled to start tomorrow in Islamabad.
Unconfirmed reports suggest that the International Monetary Fund (IMF) has urged the Government of Pakistan to end subsidies on petrol, capped for one month though the actual subsidy amount is not in the public domain. Sources in the Ministry of Finance and Petroleum Division told Business Recorder on condition of anonymity that the government has informed the Fund that it intends to provide a subsidy for the poor and vulnerable through the issuance of petrol cards to motorcyclists capped at 20 litres per month – an amount which will be cross subsidised by raising the levy on other consumers.
The government earlier noted that digital wallets (via Mobile Apps) would be the method used to disperse this subsidy; however, Business Recorder learnt till the filing of this report that this may not be the case, FBR’s total collections (July-March) were Rs9,307 billion against the downward revised target of Rs9917 billion, reflecting a shortfall of Rs 610 billion. Total collections for March were Rs 1185 billion against the month’s target of Rs1367 billion, showing a shortfall of Rs182 billion – the highest shortfall in any month in the current fiscal year.
READ MORE: PL cut on petrol may lead to revise budgeted target
Fuel prices began to decline 8 April (yesterday) as markets learnt of the two-week ceasefire – a 15 percent decline in global crude oil price was witnessed raising expectations in Pakistan that this would lead to a substantial reduction in domestic prices. However, the pressure on the budget deficit due to the 38-day long US/ Israel and Iran war may refrain the government from passing on the entire fuel price decline benefit to domestic consumers and may lead to a higher petroleum levy rate.
Currently, Brent crude futures are down by USD15.24, or 13.95 percent, to USD94.03 per barrel. A reduction in premiums on petrol and HSD have declined by 5 percent from USD9 per bbl and USD23 per bbl, energy experts said.
According to a source in the Petroleum Division the price of high-speed diesel (HSD) could witness a massive cut of up to Rs 60 per litre given that at present there is no levy on this item, while petrol prices may be reduced by around Rs 30-35 per litre.
The Prime Minister has directed the petroleum product review committee to ensure that the savings associated with a decline in prices are passed on directly to the public. The committee will monitor the market on a 48-hour window to finalize the new rates.
The government will also consider the Petroleum levy (PL) collection to date, oil marketing companies (OMCs) inventory and projected global oil pricing trend, sources added.
The government budgeted a petroleum development levy collection of Rs1.47 trillion for fiscal year 2026, with Rs871 billion, or 59 percent of the target collected in the first seven months (July-January 2026), according to sources.
The IMF projected a shortfall of Rs 157 billion in the budgeted petroleum development levy (PDL) for 2025-26 in its second review December 2025 documents, well before the start of the Middle East conflict, and projected collection at one percent of the GDP, with total collection depending on the GDP growth.
Copyright Business Recorder, 2026