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

ISLAMABAD: The federal government has prolonged its austerity and fuel conservation measures until June 13 as uncertainty persists over the Middle East conflict and diplomatic engagement between the United States and Iran remains stalled.

The Cabinet Division issued a formal notification after Prime Minister Shehbaz Sharif approved the extension on the recommendation of the implementation committee.

Under the notification, the government will continue a 50% cut in fuel supply for official vehicles during the extended period. It has also decided to keep 60% of official vehicles off the roads as part of the ongoing cost-saving steps.

The austerity plan was first announced by Prime Minister Shehbaz Sharif on March 9 in a televised address, shortly after the government raised petrol and diesel prices by 20%.

Fuel prices in Pakistan had risen sharply after oil supplies were disrupted by the closure of the Strait of Hormuz, a major route for global oil and gas shipments. Iran shut the strait in response to joint attacks by the United States and Israel that began on February 28 and ended on April 8 after a Pakistan-mediated ceasefire.

Although the ceasefire was extended, the two sides have remained divided over proposals aimed at permanently ending the conflict, particularly on the issue of their respective blockades of Hormuz.

Measures remain in force across government institutions

In his March 9 address, the prime minister said the wider region was in the grip of conflict in the Middle East and said Pakistan was making diplomatic efforts to help ease the crisis.

The austerity package applies across federal government institutions, including ministries, departments, autonomous bodies, state-owned enterprises, the legislature, defence organisations and the judiciary.

Besides the reduction in fuel use, the plan had cut government office operations to a four-day workweek, with the banking sector and essential services exempted from the arrangement.

Federal and provincial departments were also directed to reduce non-essential spending by 20% during the final quarter of the current fiscal year.

The measures further included a ban on official foreign travel by ministers, parliamentarians and government officials, except for obligatory visits.

Up to 50% of government employees were instructed to work from home on alternate days, except those serving in essential services.

Other steps included mandatory economy-class travel for officials and replacing physical meetings with virtual ones in an effort to reduce expenditure.

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

The latest extension keeps in place the restrictions first introduced in March as the government continues to respond to the economic fallout linked to the regional conflict and energy supply disruption.