Reduction in petroleum prices will help Pakistan in 2015

Pakistan highly depends on the imported petroleum products from oil producing countries. Since a huge foreign exchange is used to pay oil bills, it is a heavy commodity that affects economy of Pakistan..

The recent drop in worldwide oil prices will help all developing countries to have some room for boost in economies. Pakistan produces about 1/3rd of its oil locally but it has to import most of the oil from Saudi Arabia and gulf countries. Thus a great amount of foreign exchange reserves are consumed towards payment of bills.

The recent 50% drop in oil prices have not been transferred to the public yet but the Pakistani government has allowed around 25% reduction in the last 3 months.

Although, an increase in sales tax is imposed on petroleum products to get more revenue. Now, the sales tax on petroleum products is 22% and for all other general products the sales tax is 17%. This step by government is not admirable as the drop in oil prices should have been fully transferred to the public.