PM urges provinces to cut spending, redirect funds to relief as oil shock strains economy

Prime Minister Shehbaz Sharif on Thursday called on the federal and provincial governments to reassess spending priorities and pool resources to support vulnerable populations as Pakistan grapples with the economic fallout of the global oil crisis triggered by the US-Israeli war on Iran.

Chairing a high-level meeting attended by Chief of Defence Staff Field Marshal Asim Munir, chief ministers of all four provinces and federal ministers, the premier emphasised the need for fiscal restraint, urging authorities to scale back development spending and redirect funds toward essential public services and agriculture.

He said the government had already taken significant austerity measures, including a Rs100 billion reduction in the Public Sector Development Programme, with the resulting savings used to finance fuel price support over the past three weeks.

According to the prime minister, the federal government provided a total of Rs129 billion to maintain a temporary freeze on major petroleum prices during the initial phase of the crisis, describing the move as a blanket relief measure to cushion households and the transport sector from sudden cost shocks.

He noted that the Centre and provinces had jointly decided earlier to pass on a cumulative increase of Rs55 in petroleum prices after consultations held shortly after the conflict began.

The prime minister warned that Pakistan, like many other countries, was being severely affected by the war’s economic consequences, adding that the country had entered a phase of economic stabilisation and was poised for growth before the external shock disrupted momentum.

He stressed that limited financial resources must now be channelled toward public welfare initiatives, particularly transport services and agriculture-related programmes, while unnecessary expenditures should be curtailed.

Separately, the premier highlighted operational challenges in maritime trade routes during the conflict, revealing that two Pakistani vessels that had been waiting to transit the Strait of Hormuz were able to proceed following diplomatic and coordination efforts led by Deputy Prime Minister and Foreign Minister Ishaq Dar and Field Marshal Munir.

He added that arrangements had recently been made for 20 additional Pakistan-flagged vessels to pass through the strategic waterway, with further facilitation expected in the coming days.

The prime minister also acknowledged the role of coalition partners in supporting the government’s response, specifically thanking Bilawal Bhutto Zardari for his engagement on austerity and relief measures, as well as President Asif Ali Zardari for holding consultations on the evolving economic situation.

He reiterated that coordinated action between the Centre and provinces would be essential to manage the financial strain caused by the global energy shock while safeguarding support for low-income households.