Category: Business

The federal government has decided to withhold the full extent of relief from users by keeping petrol prices unchanged. According to reports, this marks the third time in the past two months that the government has taken not transferred the reduction in global prices to domestic users. 

Petrol prices remain untouched at Rs252.63 per liter despite the creation of room to pass relief to consumers. Islamabad decided to raise the Inland Freight Equalization Margin (IFEM) on petroleum products by Rs1.87 per liter to plug the losses that were sustained by the oil industry. 

As per reports, refineries and oil marketing companies’ (OMCs) losses amount to a staggering Rs34 billion which were reportedly incurred because of a ‘tax loophole’ that existed in the Finance Bill 2024-25.

Since the finance act labelled petroleum products as exempt, those in the oil sector could no longer claim the sales tax amount which they had paid to acquire their inputs. This caused oil companies to suffer financially.

However, the IFEM is not a permanent charge as the Petroleum Division has suggested that the financial losses, amounting to Rs34 billion can be recovered within 12 months. If this is true, the charge may be removed in just a year.

However, the price of high speed diesel (HSD) has recorded a drop or Rs2 per liter, despite the higher IFEM, and will remain unchanged for the next two weeks. After witnessing a drop in prices, the ex-depot price of HSD sits at Rs254.64 per liter, slightly lower than its price of Rs256.64 prior to the revision.

Currently, the government charges approximately Rs78 per liter under the petroleum development levy. This is to be charged on both petrol and HSD, significantly raising the price of the commodity for consumers.

The federal government does not charge consumers any general sales tax (GST) on petroleum products. However, the government does charge a customs duty of Rs17 per liter on HSD and petrol. 

Put together, the government extracts approximately Rs96 in revenue from each liter of petrol sold. Fuel suppliers and distributors tack on an additional 17 rupees per liter as markup.

Reports have outlined how the government has blocked a Rs18 per liter drop in fuel prices to deter the general public from purchasing petroleum while simultaneously raising government revenues.  With HSD and petrol sales averaging about 750,000 tons per month, both commodities bring in a significant amount of revenues for the national exchequer.

Islamabad has decided to introduce a bill in the National Assembly which could allow for the digital tracking of petroleum products in various stages of the production process. According to reports, officials aim to introduce tracking mechanisms from import and production to retail sales.

Tracking petroleum products could allow for a reduction in petroleum smuggling and may reduce instances of retailers mixing inferior fuels into high-grade fuel to illegally boost profit margins. As per motor vehicle experts, fuel adulteration results in significant “engine wear and poor performance”.

While not immediately apparent, the smuggling of petroleum products into the country results in greater damage. Smuggled petroleum evades taxes and duties, allowing for the generation of supernormal profits for all those involved in the malpractice. However, this phenomenon results in the national exchequer losing out on a staggering Rs300 to Rs500 in annual tax revenue.

Moved by Pet­roleum Minister Ali Per­vaiz Malik, the Petroleum (Amend­ment) Act, 2025 aims to include clauses that can track petroleum products via the usage of information technology. Moreover, reports indicate that the amendment, if passed, will result in strict punishments for those involved in operating illegal fuel stations, decanting fuel and transporting smuggled petroleum products.

The introduction of the clauses to the amendment could grant government officials, such as deputy and assistant commissioners, along with a handful of other officers, the power to confiscate fuel, machinery and the equipment of fuel vendors not abiding by the law. 

If the amendment gets passed, any entity convicted of importing, storing, refining, moving or supplying illegally procured petroleum products will be slapped with a Rs1 million fine. To discourage individuals from repeatedly engaging in the illegal sale of petroleum, those found to be violating the legislation repeatedly will have to face a larger fine of Rs5 million.

Moreover, the owner of a facility with an invalid license will be liable to pay a Rs10 million fine to the government in addition to facing a seizure of their stock and machinery. Facility owners who possess an expired licence will be given a period of six months to ensure their licences are renewed, after which they can be fined Rs1 million for non-cooperation.

The fear of paying the aforementioned hefty fines is likely to bring more petroleum importers, producers and retailers into the tax net, thereby boosting tax revenues.  Moreover, ensuring that every entity is subject to the same rules will reduce the upside of not cooperating with the law, as the opportunity to generate supernormal profits by engaging in illegal activities will not seem as attractive given the possibility of facing a fine.

A leading policy analyst has admitted that Pakistan’s influence in the global tech and financial space has been growing on Indian television. Speaking at Arnab Goswami’s show, the expert also warned that while India’s economic position has weakened because of the recent war it had with Pakistan, Pakistan was rapidly benefiting from the global narratives and trends by deeply entrenching itself in the world of cryptocurrency, especially in the West.

At the core of this is Pakistan Crypto Council (PCC), an official entity established in the beginning of this year by the federal government on March 2025 by way of an official Finance Division directive, the council unites members of the State Bank of Pakistan (SBP), the Securities and Exchange Commission Pakistan (SECP), IT Ministry, and Law Division under the umbrella of a single organization.

Under the leadership of Finance Minister Muhammad Aurangzeb and PCC CEO Bilal Saqib, the council is tasked with constructing a regulatory framework that makes digital assets safe and accessible within Pakistan. As per reports, this has placed Pakistan among the leading blockchain countries in the world.

Addressing Goswami’s show, the Indian analyst highlighted Pakistan’s recent partnership with World Liberty Financial (WLF) crypto venture that is supported by Donald Trump. This move indicates that Pak-US financial ties are strengthening and that both countries are poised for further collaboration with respect to the digital asset space. As per the expert, Zach Ritco, son of US President Donald Trump’s ally Steve Whitkoff, recently visited Pakistan and inked a deal with the PCC.

According to reports, the agreement could open doors for multimillion-dollar crypto exchanges, further cementing Pakistan’s economic relations with the US-based blockchain networks, while also marking a major step towards ‘digital diplomacy’. The aforementioned transactions include remittance transfers and business transactions that crypto may be able to facilitate, as traditional financial institutions are known for charging extortionate fees at times.

In Dubai, after Ritco’s dealings with the PCC in Pakistan, he convened with Eric Trump, son of US President Donald Trump, at the World Crypto Conference. The conference was attended by Pakistani officials and American crypto personalities, and we see Islamabad using its alliances to extend its foothold in the field of global finance and technology. 

Reflecting India’s sentiments about Pakistan’s growth, the expert warned the audience about such relations, highlighting how these relations would be able to imply grave financial clout, especially at a time when the Indian nation is struggling to recover from the economic losses in its unjustified war effort against Pakistan.

The Collectorate of Customs Enforcement at Karachi has managed to halt a major smuggling operation, confiscating 14 tons of donkey hides that were being illegally shipped to China. As per reports, the hides were falsely labelled as leather products to facilitate the clearance process and were worth approximately Rs80 million.

Donkey hides are highly sought after in China, where gelatin extracted from the hides is used in beauty products and traditional medicine. Reports have revealed that a key official from the Collectorate of Customs Enforcement has commended the relevant stakeholders involved in the seizure. Under Pakistani law, the export of donkey hides is prohibited under export policy regulations.

The Collectorate is responsible for curbing transnational smuggling operations and analysing suspicious cargo to verify whether the contents align with their declared labels. While the Collectorate of Customs Enforcement typically deals with the seizure of contraband such as cigarettes, vehicles, and petroleum products, customs officials maintain strict vigilance even over shipments that may not initially appear suspicious, ensuring that smuggling activities remain effectively curbed.

At the South Asia Pakistan Port Terminal (SAPT) in Karachi, the Risk Management Profiling System identified a questionable consignment containing 285 packages that were mislabeled as leather goods. Reports suggest that the container, numbered SEGU-3154225 and carrying the donkey hides, was initially cleared by the Customs Export Collectorate.

However, officials later handed the container over to the Anti-Smuggling Department for inspection. Upon examination, customs officers discovered that the cargo contained donkey hides instead of genuine leather, prompting them to initiate legal proceedings.

According to reports, the Anti-Smuggling Department relocated the seized donkey hides to their warehouse for safekeeping. Moreover, legal action has been initiated against the exporter under the provisions of the Customs Act.

Chinese demand for donkey meat and hides led to a meeting between Zhao Fei, Vice President of China’s Donkey Industry Branch, and Pakistan’s Minister for National Food Security and Research, Rana Tanveer, in April 2025. As per reports, China expressed its interest in establishing donkey farms across Pakistan.

Facilities proposed to meet China’s demand for donkey meat are intended to ensure that the domestic donkey population is not depleted by mass hunting operations. These farms are expected to operate under strict oversight to ensure full compliance with legal and ethical standards.

China reportedly plans to set up donkey farms in Gwadar’s export processing zone, along with the necessary infrastructure to transport meat and hides to the Gwadar port.

Pakistan’s economic woes continue as the economy witnessed its trade deficit grow to a staggering $3.4 billion in April 2025. According to reports, economic experts believe that Pakistan’s overall current account balance may close in the red for fiscal year (FY) 2024-25, as Pakistan runs persistently high trade deficits.

Macroeconomic indicators exhibited signs of revival in March 2025 as Pakistan logged its largest current account surplus of $1.2 billion. For reference, the current account considers net export income, net income from abroad and net current transfers.

Cash-strapped Pakistan was only able to achieve a surplus based on the net current transfers component of the current account, which considers remittance inflows into the country. According to reports, Pakistan has witnessed a significant growth in remittance inflows, largely because of 2.4 million migrating out of the country over the last three years.

Data from the Pakistan Bureau of Statistics (PBS) paints an alarming picture, revealing falling export revenues alongside growing import bills. Pakistan’s trade deficit surged to a staggering $3.39 billion, translating into a month-on-month (MoM) deficit growth of 55.2 percent.

The widening of the trade deficit is likely to put significant depreciatory pressure on the rupee, resulting in a subsequent pressure on the State Bank of Pakistan’s (SBP) foreign reserves. This is because the SBP follows a managed float regime, intervening in the foreign exchange market to prevent the rupee from straying beyond its permitted exchange rate band.

As per data from the PBS, Pakistan’s import bill grew to a whopping $5.53 billion, indicating that the import bill had recorded a 14.52 percent growth on a MoM basis. Export figures in April 2025, on the other hand, witnessed a 19.05 percent MoM drop, falling to just $2.14 billion.

Moreover, this trend of rising imports and falling exports is present in year-on-year (YoY) trade statistics as well. Imports have logged a 14.09 percent YoY increase, with exports witnessing 8.93 percent fall on a YoY basis. 

Aggregated data from the PBS indicates that the trade deficit for the first ten months of FY 2024-25 has ballooned to a colossal $21.35 billion. The breakdown of Pakistan’s trade statistics over the aforementioned period has revealed that total exports stand at $26.86 billion, vastly outweighed by imports amounting to $48.21 billion.

Details from reports suggest that the higher import bill signifies a revival of the economy, as the domestic economy demands more petroleum products. The surge in petroleum demand comes on the back of higher vehicle sales due to lower interest rates.