Pakistan announced a package of austerity measures on Thursday to conserve energy as fuel prices spike because of the Gulf conflict, the Daily Mirror reported, carrying a Reuters report.
The measures cut fuel for official vehicles and ban state purchases of vehicles, foreign visits by officials and official dinners. The government also barred the purchase of all durable goods except IT procurement, and ordered a switch to teleconferencing for meetings.
It is the second such package this year. In March, Pakistan closed schools for two weeks, cut fuel use across government and pushed office workers to work more from home.
Why
Pakistan is facing the prospect of gas and power shortages as the conflict disrupts liquefied natural gas supplies and drives up petrol and diesel prices.
Attacks by the United States and Israel on Iran, now more than six months ago, disrupted oil and gas exports through the Strait of Hormuz. Fighting between Saudi Arabia and the Iran-backed Houthis has since put trade through the Red Sea at risk as well, closing off the alternative route.
Separately, a policy that took effect on Wednesday offers owners of motorcycles, rickshaws and small cars a subsidy of 100 rupees — about 36 US cents — per litre, on a capped monthly quota, to ease the impact of rising prices.
The same instrument Sri Lanka reached for
The pairing is familiar. Pakistan is cutting state fuel consumption while subsidising consumption by small vehicle owners at Rs 100 a litre — the identical headline figure, in a different currency, to the Rs 100-per-litre diesel relief Sri Lanka introduced in May under the same war-driven price shock.
Sri Lanka’s version drew IMF attention rather than approval. The Fund’s programme requires the restoration of cost-recovery pricing in fuel and electricity, and it has cautioned against open-ended fuel subsidies during the energy shock. The two countries are exposed to the same supply disruption, but Pakistan is not operating under the prior actions Colombo is.
Not reported
Reuters does not say by how much fuel for official vehicles is being cut, for how long the measures run, which agencies are exempt, or what the subsidy’s monthly quota or fiscal cost is. Note that Pakistan’s March package — a separate, earlier round — carried its own terms, and the two should not be conflated.
