Pakistan extends austerity measures until June 13 amid US-Iran standoff

Residents cross a market in Parachinar, December 3, 2024. — AFP
  • The government must keep 60% of official vehicles off the road.
  • The United States and Iran are at odds over the proposal to end the war in the Middle East.
  • Ban extended to visits abroad, except for compulsory travel.

The federal government on Monday extended its austerity and fuel-saving measures until June 13, amid uncertainty over the Middle East conflict, while diplomatic negotiations between the United States and Iran remain deadlocked.

The Cabinet Division issued an official notification after Prime Minister Shehbaz Sharif approved the extension on the recommendations of the implementation committee.

According to the notification, a 50 per cent reduction in fuel supply to official vehicles will remain in effect during the extended period.

The government has also decided to withdraw 60% of official vehicles from the road as part of ongoing austerity measures.

Prime Minister Shehbaz first presented the austerity plan on March 9 in a televised speech, days after the government increased gasoline and diesel prices by 20 percent.

Fuel prices recorded a sharp rise in the country following the disruption of oil supplies due to the closure of the Strait of Hormuz, a key route for transporting oil and gas.

Iran closed the strait in response to joint attacks by the United States and Israel, which began on February 28 and ended on April 8 following a Pakistan-brokered ceasefire.

Despite the extension of the ceasefire, the two sides remain at odds over proposals to definitively end the war, including their respective blockades of Hormuz.

In his televised address on March 9, Prime Minister Shehbaz said the entire region was gripped by conflict in the Middle East and stressed that Pakistan was continuing its diplomatic efforts to help defuse the crisis.

He then announced the austerity plan applicable to all institutions of the federal government, including ministries, departments, autonomous agencies, public enterprises, the legislature, defense organizations and the judiciary.

Besides cutting fuel, the plan reduced government office operations to a four-day work week, although the banking sector and essential services were exempt.

Federal and provincial departments were required to reduce non-essential spending by 20% in the last quarter of the current fiscal year.

The plan imposed a ban on official visits abroad by ministers, parliamentarians and government officials, except for compulsory trips.

Up to 50% of government employees were expected to work from home every other day, except those in essential services.

The measures also included mandatory economy class travel for civil servants and a shift from physical to virtual meetings to reduce costs, among others.

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