Macro Bites

Macro Bite # 53

3 min read
It may be a new week in Pakistan, but the debate raging since yesterday is an old one. That’s because on Thursday, the federal government decided to increase fuel prices in the country. The price of petrol has gone up PKR 5.40 per litre, while high-speed diesel (used primarily by trucks and public buses) saw a price increase of PKR 2.54. The Petroleum Levy is near its lowest rate in the last six years, and it remains a source of unending debate.
On the one hand, some argue that the petroleum levy, an indirect tax (but now counted under non-tax revenues), hits less-privileged people the hardest. This is compounded by the fact that poor public transport options mean that owning a motor bike is virtually a necessity for large segments of the population. A lower petroleum levy also means more disposable income for people, which in turn can spur consumption-driven growth in the economy. On the other hand, the petroleum levy is an important source of government revenue. In FY 2020-21, the levy was estimated to bring in PKR 450 bn, nearly 10% of overall tax revenue. A lower rate inevitably means cuts in government spending elsewhere which could have potentially provided more value to citizens.
Regardless, the debate is likely to go on. What do you think; should all fuels be heavily taxed? Only some, but not others? Or none at all? Email me and let me know!

The Sindh Government recognises a total of 1414 katchi abadis in the province. Estimates from the ground suggest there are more katchi abadis than that in Karachi alone.

Source: Katchi Abadies Department Government of Sindh; MP Analysis


KSE-100 rose marginally this week due to positive news from SBP and OGRA.PKR again depreciated slightly this week in relation to USD. Local gold prices remain unchanged from last week. After a few weeks of anemic growth and decline, the KSE-100 rallied this week as the State Bank received USD 1 billion through Eurobond sales, taking foreign currency reserves to a four-and-a-half year high. The increase in fuel prices also led to greater stock buying in oil sectors. PKR depreciated again this week, as tensions in neighboring Afghanistan escalate. Local gold prices remained unchanged from last week.

Annual change in Sensitive Price Index rose to 12.75% vs. 12.28% last week. Poorest of country (Q1) were disproportionately affected with change of 16.72%. On a weekly basis, prices rose for all quintiles by 0.41%.
The annual change in Sensitive Price Index rose to 12.75% vs. 12.28% last week. The poorest of the country (Q1) continue to bear the brunt of increased prices, with a change of 16.72% vs. 11.91% for Q5. On a weekly basis, prices rose for all quintiles by 0.41%.
Prices of Sugar, Tomatoes and Onions rose vs. last week. Fall in Chicken prices yet again helped moderate inflation. Increase in prices of Refined Sugar (+3.02%), Tomatoes (+8.18%) and Onions (6.96%) contributed to inflation this week. Additionally, prices of fuels such as Cooking Oil (+3.89%) and LPG cylinders (+6.06%) are on the rise. Falling Chicken prices (-3.43%) yet again moderated weekly inflation numbers.

What Else We’re Reading (Local)

  • Hum Mart, one of the earliest eGrocery startups, has gone on hiatus despite the backing of a big media group and favourable Covid-19 conditions. What went wrong? (Profit)
  • A locally assembled electric bike is about to hit the roads. The Jolta JE-70 has been priced at PKR 82,500 and the company claims buyers will save PKR 4,000 each month compared to a petrol-driven 70cc bike. (Dawn)

What Else We’re Reading (International)

  • High-level corruption in China to access cheap credit, tax breaks and procurement contracts may be fuelling unsustainable borrowing and building. (Foreign Affairs)
  • The blast in Dasu, that killed nine Chinese workers, has caused some tension between China and Pakistan. However, the relationship between the two countries overall is likely to remain unaffected (South China Morning Post)

Asad Pabani

Journalist, researcher and documentary filmmaker. Prior works featured in Dawn, Soch Videos and Pioneers Post.

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