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

Prime Minister Shehbaz Sharif on Sunday reviewed multiple proposals and recommendations to implement austerity and prudent spending, with a final action plan set to be formally announced on Monday (tomorrow) as the crisis in the Middle East deepens.

Prime Minister Shehbaz, a day earlier, 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 directed the authorities to formulate a strategy focusing on economic growth, simplicity and savings, and directed the relevant committee to present practical and workable recommendations within 48 hours.

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

“The Prime Minister was briefed in detail on the potential economic impact of the evolving global situation, particularly on Pakistan’s energy supply and fluctuations in international markets,” the statement said.

“In view of recent international developments, timely implementation of measures to safeguard the national economy is essential,” said Prime Minister Shehbaz. “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 challenging period. He directed the federal cabinet, provincial representatives and senior officials to ensure efficient use of resources and provide relief to the public.

The Prime Minister emphasized the need for wise management of national resources during this difficult period and assured that once the situation improves, the government will provide greater relief to the public.

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

Read more: PM Shehbaz orders austerity measures

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

The officials also confirmed that Pakistan currently has adequate reserves of diesel, gasoline and other petroleum products, and that the government has taken precautionary measures to manage any emergency situation. The meeting highlighted the careful and efficient use of energy.

The IT Ministry was also directed to provide a system for continuous monitoring of supply and demand to enable timely decision-making, and provincial chief secretaries briefed the Prime Minister on economic activities, energy usage and administrative preparedness in their regions.

Regional tensions rose sharply after US and Israeli airstrikes last week killed Ayatollah Ali Khamenei, Iran’s Supreme Leader, along with several senior officials. The attacks triggered retaliatory actions by Iran, widening the conflict throughout the region.

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

Also read: Iran says it could fight US and 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 on Friday posted their biggest weekly gain since extreme volatility during the COVID-19 pandemic in spring 2020, when shipping and energy exports through the key waterway were disrupted.

Following this, the government sharply increased diesel and gasoline prices by Rs 55 per liter, or 20%, marking the first in a series of similar increases 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 a two-year high.

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