PM Shehbaz reviews austerity proposals ahead of action plan amid Middle East crisis

Prime Minister Shehbaz Sharif on Sunday reviewed multiple proposals and recommendations for implementing austerity and prudent spending, ahead of a formal action plan scheduled for announcement on Monday, as tensions in the Middle East continue to impact global markets.

A day earlier, the PM directed relevant ministries to prepare a comprehensive plan focused on austerity, savings, and efficient resource management in light of global economic pressures caused by regional tensions. He instructed authorities to develop practical and workable recommendations within 48 hours.

According to a statement from the Prime Minister’s Office (PMO), Sunday’s high-level meeting aimed to evaluate measures to safeguard Pakistan’s economic stability amid recent international developments.

“The prime minister received a detailed briefing on the potential economic impact of the evolving global situation, particularly on Pakistan’s energy supplies and fluctuations in international markets,” the statement said.

PM Shehbaz underscored the importance of timely implementation of measures to protect the national economy. “The government is closely monitoring the situation and will take all necessary decisions to ensure economic stability,” he said, pledging that all possible steps would be taken to protect public interests during this challenging period.

He emphasised prudent management of national resources and assured that once the situation improves, the government would provide greater relief to the public. The statement clarified that austerity measures would not affect industrial or agricultural sectors, ensuring production, exports, and food security remain intact.

“Everyone should bear the burden of savings and austerity fairly. The privileged segments of society and elite classes should set an example in making the necessary adjustments,” the PM said.

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Officials confirmed that Pakistan currently has adequate stocks of diesel, petrol, and other petroleum products, and precautionary measures have been taken to manage any emergency situation.

The meeting also directed the IT ministry to establish a system for continuous monitoring of supply and demand, while provincial chief secretaries briefed the PM on regional economic activities, energy use, and administrative preparedness.

Regional tensions escalated sharply after air strikes by the United States and Israel last week killed Ayatollah Ali Khamenei, Iran’s Supreme Leader, along with several senior officials. The strikes triggered retaliatory actions by Iran, widening the conflict across the region.

In response, Iran launched attacks on US military bases in several Gulf countries, significantly expanding the confrontation.

Also Read: Iran says it could fight US and Israel for six months as regional conflict widens

Iran has also closed the Strait of Hormuz following airstrikes by the United States and Israel last week, halting the movement of oil supplies to many countries.

As a result, crude oil prices on Friday recorded their strongest weekly gain since the extreme volatility during the COVID-19 pandemic in spring 2020, as shipping and energy exports through the key waterway were disrupted.

Following this, the government sharply increased diesel and petrol prices by Rs55 per litre, or 20% — marking the first in a series of similar surges expected in the coming days due to the ongoing US-Israel and Iran conflict, which has disrupted supply chains and pushed crude oil prices to a two-year high.

The increase in petrol prices was more than the surge in international markets, as the government chose to collect more money than required from motorcyclists and car owners to subsidise the use of diesel, mostly by the public transport and agriculture sectors.