As the government prepares to unveil the FY2027 budget, economists are sounding the alarm over potential new financial burdens on the public.
Experts warn that the upcoming fiscal consolidation strategy relies heavily on increasing indirect taxes and slashing vital subsidies.
Skyrocketing Power Tariffs
A Heavy Blow to Citizens
This specific policy direction is highly likely to trigger massive increases in energy prices across the country. Consequently, everyday households and the fragile middle class will face severe, renewed inflationary pressures.
Economists argue that the government is reverting to short-term, aggressive measures simply to bridge its persistent fiscal deficit. This approach heavily utilizes regressive indirect taxes and arbitrary non-tax revenues to generate fast state liquidity.
A prime example is the Petroleum Development Levy (PDL), which has transformed into a pure revenue-generation tool. The state targets an astronomical collection of around Rs1.7 trillion through this levy alone in the upcoming cycle.
Currently, standard consumers already pay well above the average electricity tariff of Rs33.4 per unit after added taxes.
Alarmingly, built-in capacity payments to power producers account for more than Rs17 per unit of that total cost. System inefficiencies, massive transmission losses, and debt burdens continue to artificially inflate what citizens pay.
Experts stress that the true affordability threshold for middle-class households sits much lower, around Rs25 to Rs30 per unit. Additionally, standard subsidy reforms may leave gaping holes in social safety nets for vulnerable populations.
The Benazir Income Support Programme (BISP) might not fully cover all groups sliding into deep poverty.As a direct result, rising costs risk deepening energy poverty and could unfortunately encourage power theft in urban areas.
True and sustainable fiscal consolidation must focus on broadening the tax base rather than punishing already compliant taxpayers.