Finance minister says no emergency like-situation in Pakistan amid global oil uncertainty

ISLAMABAD: Finance Minister Muhammad Aurangzeb on Wednesday cautioned over oil stocks amid global uncertainty due to the US-Israel and Iran war, but said that there was no emergency-like situation in Pakistan.

Briefing the Senate Standing Committee on Finance, the minister suggested conserving fuel as a preventive measure.

“We are not going for rationing of fuel as there is no fuel shortage in the country, but things could become serious if the war drags on,” Aurangzeb said in response to the query by Saleem Mandviwala, the chairman of the committee.

The committee was informed that there were petrol and diesel stocks for 28 days, crude oil stocks for 10 days, and liquefied petroleum gas (LPG) and liquefied natural gas (LNG) for 15 days.

“But some cargoes have been stuck in Qatar and to offset this short supply, the output from local gas fields was being enhanced,” he added.

The committee was informed that the finance ministry would hold daily meetings with the relevant departments to monitor the country’s fuel position and fuel prices in international markets.

It is worth mentioning that Pakistan on Wednesday formally requested that Saudi Arabia provide an alternative oil supply route through Yanbu to maintain its fuel supply chain in the wake of the closure of the Strait of Hormuz.

Meanwhile, State Bank of Pakistan Governor Jamil Ahmad noted that global oil prices could reach $100 per barrel, which may increase external sector pressures.

It is worth noting that energy imports account for a significant portion of Pakistan’s annual import expenditure.

Ahmad added that Pakistan’s foreign exchange reserves were at a comfortable level and had reached over $16 billion.

He said the central bank expected foreign exchange reserves to reach $18bn by June and around $20bn by December. At the same time, the SBP governor emphasised that the reserves were not accumulated through additional borrowing.

He said that the central bank had purchased approximately $24bn from the market during the past three years, adding that these purchases helped stabilise the currency and improve external buffers.

“Pakistan’s external debt has increased from $55bn to about $103bn over time,” the SBP governor said. However, he noted that no additional external borrowing had occurred during the past four years.

He said Pakistan’s total external liabilities currently stand at about $138bn. The governor also briefed the committee on the country’s economic outlook and macroeconomic indicators.

He said inflation during the current fiscal year was expected to remain between 5per cent and 7pc. He added that inflation may also remain within the same range during the next fiscal year.

However, he warned that regional tensions could influence inflation trends in the coming months.

“Rising geopolitical risks and energy prices may affect Pakistan’s import bill and domestic inflation,” he said.

The governor said Pakistan’s current account deficit could remain around 1pc of gross domestic product during the current fiscal year. He added that the deficit was expected to remain within the projected limit despite rising petroleum prices.

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