Pakistan orders fresh austerity measures as fuel costs surge

Prime Minister Shehbaz Sharif has approved a new nationwide austerity and energy-conservation drive as Pakistan responds to higher international petroleum prices linked to escalating tensions in the Middle East. The measures were approved during a high-level meeting and include restrictions on government fuel consumption, official purchases, foreign travel and other expenditure, with several directives taking effect immediately.

Under the announced plan, fuel allocations for official government vehicles will be reduced by 50% for three months. Operational vehicles used by the armed forces, civil armed forces, law-enforcement agencies, essential services and the Federal Board of Revenue are exempt. Development projects are also outside the fuel-reduction requirement, while a monitoring mechanism has been established to consider requests for other exemptions.

The federal government has also imposed a complete ban on purchasing official vehicles and most durable goods, although information-technology procurement and development projects are exempt from parts of the restrictions. Non-employee-related expenditure in the federal budget for the 2026-27 fiscal year will be reduced by 5%, including comparable spending by Pakistan's foreign missions. Obligatory costs such as rent, education fees and medical arrangements for officials posted abroad are excluded from that reduction.

Foreign official travel will face tighter restrictions for three months, with limited exemptions for scholarships, training programmes and institutional arrangements. Where an overseas visit is considered unavoidable, ministers and other government functionaries will be required to travel in economy class. Official meetings are to be conducted through teleconferencing where practical, while government-funded dinners, seminars, training sessions and conferences will also be curtailed, subject to specified exceptions.

The conservation programme also retains nationwide commercial closing guidelines. Shops, markets, shopping malls, bazaars and most general retail outlets are to close by 9pm, while marriage halls, marquees and other venues hosting festive events are to close by 10pm. Restaurants, cafés and food outlets are to close by 11pm. Pharmacies, hospitals, medical laboratories, bakeries, tandoors, dairy shops, fuel stations, electric-vehicle charging facilities, gyms, sports facilities, information-technology companies and call centres are among the categories exempt from these timing restrictions.

A single-dish requirement will also apply to marriage-related functions and events. The federal measures apply directly to federal institutions, while provincial governments and the administrations of Azad Jammu and Kashmir and Gilgit-Baltistan are expected to determine their own implementation arrangements. A designated committee can examine requests for exemptions and forward recommendations for approval where necessary.

The measures come as the government tries to limit the domestic impact of elevated fuel costs. A separate relief programme provides a Rs100-per-litre subsidy within capped monthly quantities for motorcycles, rickshaws and small cars of up to 800cc. The government has maintained existing petroleum taxes, while officials are assessing the broader economic consequences of instability in the Middle East and its effect on energy prices and supplies.

This is the second major austerity and fuel-conservation effort introduced during the current period of Middle East instability. Implementation will now depend on federal departments enforcing the expenditure and fuel restrictions, businesses observing applicable closing schedules and the monitoring committee handling exemption requests. Provincial and regional authorities will separately decide how corresponding conservation measures are applied within their jurisdictions.