Pakistan announces austerity measures to save fuel amid Mideast conflict

Pakistan's Prime Minister Shehbaz Sharif on Monday unveiled several austerity measures, including a cut in government fuel allowances and school closures to save fuel amid a spiraling conflict in the Middle East.

All schools would close for two weeks starting March 16, while higher education would move to an online format effective immediately, Sharif said in a televised address.

Fuel allowances for government departments would be cut in half, and 50% of government staff would work from home to save fuel, he said.

All government offices except banks would also operate four days a week, Sharif said.

"To stabilise the economy we have taken difficult decisions," Sharif said in a televised address to the nation, adding that the government was trying to minimise the burden on citizens although it had little control over global fuel prices.

Schools will from next week close for two weeks, while universities will shift to online classes to reduce commuting.

Government departments will face a 50% cut in fuel allowances for two months, while 60% of official vehicles – excluding buses and ambulances – will be taken off the road, Sharif said.

He also said that only 50% of staff will work in offices, except in essential services, while government offices will operate four days a week.

The government will also cut departmental spending by 20%, ban the purchase of vehicles, air conditioners and furniture, and restrict most foreign travel by ministers and officials.

Pakistan last week raised petrol and diesel prices by 55 rupees ($0.1971) per litre, the largest increase on record, after global oil markets surged due to the conflict.

As Pakistan imports most of its energy, its inflation rate is highly sensitive to global fuel prices.

The central bank said earlier on Monday that rising global energy prices linked to the Middle East war had increased uncertainty around the inflation outlook, after the bank kept its policy rate unchanged at 10.5%.