Pakistan's Petroleum Levy Collection Hits Record High Amid Rising Costs

Pakistan's petroleum levy collection reached an unprecedented Rs1.57 trillion in the fiscal year 2025-26, a significant increase attributed to elevated consumer oil prices partly influenced by the US-Israel attacks on Iran. This surge in revenue collection occurred even as the cost of operating the civil government rose by 16 percent, surpassing Rs1 trillion for the first time.

Despite implementing restructuring and austerity policies, the expenditure on the civil government climbed to Rs1.033 trillion from Rs892 billion in the previous fiscal year. Defence spending also saw an increase of 18 percent, reaching Rs2.588 trillion. However, the government managed to contain the overall fiscal deficit to 2.6 percent of GDP, the lowest since fiscal year 2003.

This fiscal improvement was bolstered by substantial cash surpluses from the provinces and a notable reduction in interest payments. Consequently, the primary surplus, which excludes debt servicing costs, achieved a historic high of 2.9 percent of GDP. The Federal Board of Revenue's collection, while falling short of its target, still saw an almost 11 percent increase compared to the previous year.