SRINAGAR: The escalating conflict in the Middle East is beginning to send economic shockwaves into South Asia, with rising global crude prices and supply disruptions prompting urgent policy responses from governments in the region. Pakistan has become the first country in South Asia to introduce sweeping austerity and fuel-conservation measures as oil markets tighten due to the ongoing Iran-related crisis.
Addressing the nation, Pakistan’s Prime Minister Shehbaz Sharif announced a series of emergency steps aimed at reducing fuel consumption and limiting government expenditure. He said the decisions were taken after consultations with federal and provincial authorities as the country braces for possible supply disruptions and soaring energy costs.
Sharif said the government had been forced to take “difficult decisions” to manage the economic fallout from the evolving geopolitical situation.
Among the immediate steps, the government has ordered a 50 per cent reduction in fuel allowances for official vehicles for the next two months. However, essential services such as ambulances and public buses will remain exempt from the cuts.
In addition, 60 per cent of government vehicles across federal and provincial departments will be taken off the road during this period in an effort to reduce fuel consumption.
The austerity package also includes salary reductions for senior political and administrative officials. Members of the federal and provincial cabinets will forgo their salaries and allowances for two months, while lawmakers at both levels will face a 25 per cent reduction in their pay.
Senior bureaucrats in the BS-20 grade earning more than Rs300,000 per month will surrender two days’ salary, which the government said would be redirected for public welfare. Officials working in the health and education sectors have been exempted from this deduction.
Pakistan will also reduce non-employee expenditure by 20 per cent during the fourth quarter of the fiscal year across all federal and provincial institutions.
The government has imposed a freeze on the purchase of vehicles, furniture, air conditioners and other equipment by public departments until June 2026. Foreign travel by ministers, advisers and government officials will be restricted and permitted only if deemed essential for national interests.
To reduce fuel usage and operational costs, government offices will increasingly rely on teleconferencing and online meetings. Official dinners, including Iftar gatherings, have been banned, and seminars and conferences will now be held at government premises rather than hotels.
Public sector offices will move to a four-day work week, and except for essential services, half of the workforce will work from home. The banking sector will not be affected by this arrangement.
The measures also extend to the education sector. All higher educational institutions will shift to online classes from March 16 to March 31, while schools will observe a two-week break starting March 16, according to the government directive issued to provincial administrations.
Pakistan’s finance minister Muhammad Aurangzeb warned that the surge in crude prices could raise the country’s oil import bill to around $600 million per month.
Global crude prices have already crossed the $100 per barrel mark, reflecting market anxiety over supply disruptions linked to the intensifying Middle East crisis.
Petroleum Minister Ali Pervaiz Malik said Islamabad is also seeking relief from the International Monetary Fund on the petroleum levy as the government attempts to manage the rising energy burden.
Sharif also warned oil traders and distributors against profiteering or hoarding, saying strict legal action would be taken against those attempting to exploit the crisis.
The developments highlight how instability in the Middle East is rapidly spilling over into South Asia’s energy markets. Countries in the region, heavily dependent on imported crude, now face growing pressure to manage fuel consumption and protect fragile economies as the global oil market reacts to the unfolding conflict.
