Business Recorder Editorials 25th August 2026

Reliance on taxing POL products

EDITORIAL: Federal Minister for Petroleum Ali Pervaiz Malik while addressing the Energy Conference this Thursday past maintained that the Petroleum Division could not continue to bear the excessive taxation and financial intervention merely to meet the budgetary targets as the sector’s sustainability is equally important.

A day later on Friday in a written response to the lower house of parliament, Ali Pervaiz Malik noted that the petroleum levy is budgeted to generate 1.676 trillion rupees in the current year and that while the levy was reduced to provide relief to consumers in the early weeks of the US/Israel invasion of Iran yet it has been restored in phases in line with the approved budgetary target. This restoration is sourced to the pressure by the International Monetary Fund (IMF) to adhere to the conditions agreed by the authorities under the ongoing Extended Fund Facility programme; notably, to ensure that the budgeted revenue is realised, no unbudgeted outlay approved (including a rise in subsidy) and any additional costs be passed on in their entirety to the consumers.

“The levy on petrol and HSD has been increased… on both products it is now 80 rupees per litre each,” the Minister’s written reply further noted. It is relevant to note that an additional reason for the recent rise in prices at the filling station is attributable to the deal that Ali Pervaiz Malik brokered, on the instructions of the Prime Minister, with the Pakistan Petroleum Dealers Association, which had begun a nationwide strike. However, the All Pakistan Goods Transport Association suspended its nationwide striker on 16 August for 40 days following successful negotiations with the government on fuel pricing, axle load limits (a provincial subject), and toll taxes to ensure that the agreed phased agreement would be implemented – an agreement brokered by Aleem Khan the Minister for Communications.

These agreements are clearly beyond Malik’s purview, however, it is significant that he took the opportunity at a conference to argue in favour of not over-burdening the sector with taxes as its implications on inflation, and thereby on the general public as well as on productivity with negative implications on employment levels cannot be disputed.

The increased reliance on the petroleum levy to meet the government’s expenditure (largely current non-development expenditure that accounts for around 93 percent of total outlay) has been evident in each subsequent budget. The reason is two-fold. First, the levy is credited under other taxes incorrectly - taxes that are not part of the divisible pool, which have to be shared with the provinces under the National Finance Commission award even though the levy is clearly a sales tax payable by the general public, which are part of the divisible pool. And secondly, and equally concerning is the fact that this is an easy to collect tax with the gas stations acting as withholding agents. There is little input from the Federal Board of Revenue (FBR) that may simply oversee the payment of the levy into the treasury.

The government must surely be aware that the poverty levels in this country are 44 percent, an unacceptable high level, and any increase in the levy not only erodes the purchasing of each rupee earned by those who purchase petrol for their vehicles but also for those who use public transport. There is, therefore, an urgent need for the government to reform the tax structure and shift the onus of a reliance on indirect (for example, sales tax whose incidence on the poor is greater than on the rich) to direct (income and rent) taxes that are based on the ability to pay principle.

The post-harvest deficit

EDITORIAL: The Asian Development Bank’s recently released report on Pakistan’s agribusiness sector has put a staggering price tag on a chronic failure in the country’s agricultural value chain: Pakistan loses a massive USD2 billion every year through post-harvest losses.

Needless to say, the figure exposes how vulnerable an entire economic sector has become, reflecting value lost from farm to market across commodities produced for domestic consumption, processing, export and those vital to the nation’s food security. In a country where agriculture accounts for roughly a one-fifth of GDP and employs more than a third of the labour force, allowing so much value to disappear after harvest, particularly as climate shocks grow more frequent and severe, is an economic failure that can no longer be treated as routine.

The climate dimension, in fact, is becoming impossible to overlook. Pakistan’s agricultural sector has been repeatedly battered by extreme weather in recent years, with floods providing the most telling illustration of what climate vulnerability now means in economic terms. The devastating 2022 floods destroyed around four million hectares of agricultural land and caused losses running into billions of dollars. And before the country had fully recovered from that blow, last year’s floods destroyed another 2.2 million hectares of cropland. These repeated shocks have disrupted supply chains, eroded farm incomes, damaged productive assets, and deepened the economic pressures the country already faces.

The ADB report, then, appropriately, places climate change among the principal structural barriers to a competitive, resilient and sustainable agribusiness sector. Beyond the frequency of climate-related disasters, it also points to inefficient water and land use, and the inadequate adoption of climate-smart practices. Climate vulnerability, however, is only one layer of the problem. The report has also identified chronic underinvestment, weak infrastructure, limited access to finance and technology gaps as mutually reinforcing constraints. It is pertinent to note that private investment accounts for less than five percent of agribusiness capital. Moreover, small- and medium-sized enterprises struggle with collateral requirements and short loan tenors, while agriculture-specific climate finance remains scarce.

The consequences of this investment deficit can be seen in the lack of physical infrastructure and facilities needed to preserve and add value to agricultural output, from cold-storage facilities and roads to testing laboratories and certification systems, contributing directly to post-harvest losses and export rejections. Then there is the technology deficit. Pakistan invests just 0.2 percent of agricultural GDP in research and development, while the adoption of climate-smart seeds and mechanisation also remains low. An outdated agriculture advisory system compounds the problem, leaving farmers without timely, locally relevant guidance.

The roadmap that the report has provided is significant because it recognises that no single reform will suffice. Its proposed National Agribusiness Investment Fund, credit guarantees, and warehouse-receipt financing could address financing constraints, while green bonds and blended finance could channel more capital towards climate adaptation. Public-private partnerships, meanwhile, could help build the cold chains and climate-resilient infrastructure that the private sector alone has been reluctant to finance.

Furthermore, the report’s proposed National Agribusiness Transformation Committee, digital monitoring dashboards and climate-smart budget tagging could bring greater coherence to a policy environment fragmented between federal and provincial authorities. Also significant is the ADB’s call for technology to move from policy rhetoric into practical use, including leasing models for drones, solar pumps, agri-tech research hubs and farmer training using AI, remote sensing and real-time data. The report’s central message must be heeded: Pakistan’s agricultural challenge is no longer simply one of producing more. It is also about protecting what is produced, adding value to it and making the entire system resilient enough to withstand a harsher climate.