Business Recorder
The moment the Prime Minister took over national television last Friday, the writing was on the wall: the petroleum price freeze was not going anywhere. A week later, it still hasn’t. The war has entered its fifth week. Pakistan’s price adjustment mechanism remains stuck in week one. We have seen this movie before. In 2022, what began under one government and carried into the next ended in a fiscal mess that still lingers in memory. To expect a different outcome this time, under even more complex global conditions, is not optimism. It is denial. No government willingly embraces fuel price hikes. It is politically costly, unpopular, and uncomfortable. But governing is not about comfort. It is about trade-offs. The irony is hard to miss. Many of those in power today once advocated a “charter of economy,” where passing through fuel prices was framed as essential to avoid exactly this kind of crisis. That conviction, it seems, has not survived contact with power. It is also, in theory, much easier to take politically tough but economically rational decisions, for government not nearing the end of tenure, or without public support – on which count, the current setup perfectly fits the bill. The numbers now tell a troubling story. The Price Differential Claim on high-speed diesel has ballooned to Rs204 per litre, nearly tripling in just two weeks. Petrol is not far behind, with PDC nearing Rs96 per litre. Even after factoring in hefty petroleum levies, the net subsidy still stands at roughly Rs139 per litre. Translated into fiscal terms, the cost is staggering. At current rates, the weekly subsidy bill is approaching Rs50 billion. That is roughly Rs7 billion a day. More than what it takes to run the civil government. Even higher than the daily equivalent of the country’s defence spending. No austerity drive, no matter how well packaged, can plug a leak of this scale. The damage is already mounting. The subsidy bill has crossed Rs100 billion and counting. Yes, these are extraordinary times, but they are not unprecedented. Persisting with the same policy error, in the hope of a different ending, is not strategy. It is self-sabotage. And the bill will come due. It always does. Whether through higher taxes, inflation, or currency adjustment, the cost will ultimately land on the same shoulders, only heavier than it needed to be. Delaying the inevitable does not reduce the pain. It compounds it. There is no denying the adjustment required will hurt. Fuel price corrections at this scale are never painless. But postponing them only ensures a sharper, more destabilizing shock later, especially when external pressures begin to intensify. And they will. A prolonged conflict will strain the external account. Imports, exports, remittances, capital flows, all vulnerable. The exchange rate will not remain immune. Pakistan simply does not have the fiscal space to sustain subsidies at this level. Nor does it have the luxury of timing all adjustments for later, when multiple pressures converge. That is not cushioning the blow. That is amplifying it. Targeted relief mechanisms remain underdeveloped, and that is a genuine constraint. But waiting for a perfect system before taking necessary action is not prudence. It is paralysis. The vulnerable must be protected. But blanket subsidies that benefit everyone, including those who do not need them, are the most expensive way to attempt that. By all means, pursue the diplomatic track. Hope for de-escalation. But economic policy cannot be built on hope. The longer the delay, the steeper the price.
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