Prime Minister Shehbaz Sharif on Monday announced a wide-ranging austerity and savings plan, saying the measures were necessary to deal with the prevailing global fuel crisis triggered by the ongoing US-Israel-Iran conflict.
The measures come as Pakistan, similar to other global economies, is facing fuel supply constraints due to the closure of the Strait of Hormuz, a key route for the movement of fuel supplies around the world.
Major oil-producing countries reported hurdles in supplying fuel to buyers after Iran began retaliating against US bases in the Middle East, following joint strikes by the US and Israel.
With supply routes disrupted, Pakistan announced a 20% increase in the price of petrol and diesel, leading to austerity and simplicity measures across the country.
Addressing the nation today, the premier said the entire region had been gripped by conflict and stressed that Pakistan was pursuing diplomatic efforts to help defuse the crisis.
“The entire region is currently in a state of war,” the PM said, adding that Pakistan was making every effort through diplomatic channels to help resolve the situation.
The prime minister also highlighted the security challenges faced by Pakistan on its western borders, saying the country continued to confront terrorism.
“Pakistan is also facing terrorism on its western borders, and our armed forces are dealing with the situation effectively,” he said, adding that the military was responding under the leadership of Chief of Defence Staff (CDF) Field Marshal Asim Munir.
The PM also condemned the attacks on Iran, which he said resulted in the assassination of Iran’s Supreme Leader Ayatollah Ali Khamenei. At the same time, he also condemned the retaliatory attacks on friendly Gulf countries.
The prime minister said he had spoken with leaders of friendly countries to discuss the evolving situation. “I have held detailed discussions with the leaders of brotherly countries and conveyed that Pakistan stands shoulder to shoulder with them in this difficult time,” he said.
He went on to say that the global oil market had reacted sharply to the conflict.
“The price of crude oil in the international market has suddenly jumped from around $60 to more than $100 per barrel,” he said, adding that daily life in Pakistan depended heavily on oil and gas supplies coming from the Gulf region.
The prime minister said the government had taken difficult economic and administrative decisions to manage the situation and reduce the impact of the energy crisis.
“We have taken difficult decisions to reduce the energy crisis and stabilise the economy despite challenging circumstances,” he said.
The premier acknowledged that the recent increase in fuel prices was a tough decision. “The increase in petroleum prices was a difficult decision taken with a heavy heart,” he said.
“My mind told me that there was no option but to increase fuel prices, while my heart worried that it could place a burden on the poor,” the prime minister added.
The premier indicated that fuel prices could rise further in the coming days due to the ongoing global energy crisis, but assured that the government would try to minimise the burden on the public.
“I assure the nation that we will make every possible effort to ensure that the burden on the public is kept to a minimum,” he said.
Austerity measures
In the same address, the prime minister said both the federal and provincial governments had decided to adopt austerity and simplicity to reduce expenditures and conserve energy during the challenging economic situation.
Under the new measures, the government will reduce fuel allocations for vehicles used by government departments by 50% for the next two months.
“For the next two months, the fuel provided to vehicles of government departments will be reduced by 50%,” he said.
The premier added that 60% of vehicles in all government departments would remain off the roads for two months to help conserve fuel.
He also announced that members of the federal cabinet, advisers and special assistants would not draw salaries for the next two months, while members of parliament would face a 25% salary cut during the same period.
“All government departments will reduce their expenditures by 20%,” he said.
The prime minister further announced a ban on foreign visits by ministers, advisers, special assistants and government officials, except for those deemed essential for the country.
“Only extremely necessary visits for national interest will be allowed,” he said, adding that teleconferencing and online meetings would be prioritised.
The austerity measures also include deducting two days’ salary from Grade-20 and above officers earning more than Rs300,000 per month.
PM Shehbaz also announced a complete ban on official dinners and iftar parties, while seminars and official events would be held only at government venues to reduce costs.
He said that 50% of staff in both public and private sectors would work from home, except in essential services.
The prime minister also announced that government offices would operate four days a week, though the decision would not apply to banks.
He added that all schools would be closed for two weeks starting at the end of the current week as part of the energy conservation measures, while all higher educational institutions would begin online classes.
He also warned traders against hoarding essential commodities to exploit the situation.
“I want to warn hoarders not to take unfair advantage of the current situation,” he said.
“Today the world is facing new challenges and the balance of power is changing,” he said, adding that new global alliances were also emerging.
He urged the nation to demonstrate unity and responsibility in dealing with the crisis. “Our nation needs unity and a strong sense of responsibility,” he said.
