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

Prime Minister Shehbaz Sharif on Sunday considered several proposals and recommendations to implement austerity and prudent spending, with a final action plan expected to be formally announced on Monday (tomorrow) as the Middle East crisis widens.

Prime Minister Shehbaz, a day earlier, had led the meeting directing relevant ministries to prepare a comprehensive plan based on austerity and savings in light of global economic pressures caused by regional tensions.

He asked the authorities to formulate a strategy focusing on economic growth, simplicity and savings, and asked the relevant committee to present practical and actionable recommendations within 48 hours.

According to the Prime Minister’s Office (PMO), today’s high-level meeting aimed to review measures to maintain economic stability amid recent international tensions.

“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.

“Given recent international developments, rapid implementation of measures to safeguard the national economy is essential,” Prime Minister Shehbaz said. “The government is closely monitoring the situation and will take all necessary decisions to ensure the stability of the economy.”

He promised that all possible measures would be taken to protect public interests and maintain economic stability during this difficult period. He directed the federal cabinet, provincial representatives and senior officials to ensure efficient utilization of resources and provide relief to the public.

The Prime Minister stressed the need for judicious management of national resources during this difficult period and assured that once the situation improves, the government would provide greater relief to the people.

The statement added that austerity measures will not affect the industrial and agricultural sectors, ensuring that production, exports and food security remain intact.

Learn more: PM Shehbaz orders austerity measures

“Everyone should bear the burden of savings and austerity fairly. The privileged segments of society and the elite classes should lead by example in making necessary adjustments,” the prime minister said.

Officials also confirmed that Pakistan currently has sufficient stocks of diesel, gasoline and other petroleum products, and the government has taken precautionary measures to handle any emergency situation. The meeting emphasized careful and efficient use of energy.

The IT Ministry was also tasked with providing a continuous supply and demand monitoring system to enable rapid decision-making, and provincial chief secretaries briefed the Prime Minister on economic activities, energy consumption and administrative preparedness in their regions.

Regional tensions sharply escalated after US and Israeli airstrikes last week killed Ayatollah Ali Khamenei, Iran’s supreme leader, and several senior officials. The strikes triggered retaliation by Iran, widening the conflict across the region.

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

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

Iran 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 recorded their biggest weekly rise on Friday since extreme volatility during the COVID-19 pandemic in spring 2020, as shipping and energy exports via this key waterway were disrupted.

Following this, the government sharply increased diesel and petrol prices by Rs 55 per liter, or 20%, marking the first in a series of similar hikes expected in the coming days due to the ongoing conflict between the United States, Israel and Iran, which has disrupted supply chains and pushed crude oil prices to their highest level in two years.

The increase in gasoline prices was greater than in international markets, as the government chose to collect more money than necessary from motorcyclists and car owners to subsidize the use of diesel, mainly in the public transport and agriculture sectors.