Pakistan hit hard by Iran war: Shehbaz Sharif govt shuts schools, announces four-day work week

Pakistan has announced a slew of measures to curb government spending and steps to save fuel as the war in the Middle East disrupts energy supplies, threatening economic stability in the South Asian nation.

Prime Minister Shehbaz Sharif outlined strict measures on Monday, including temporary halting salaries for cabinet ministers, shutting schools and moving to a four-day work week. For the next two months, government expenditure will be reduced by 20% and fuel allocated to vehicles of government departments will be reduced by half, he said.

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“The regional situation and war has affected our hard-gained economic stability but the government is making every effort to prevent burdening the common man,” Sharif said.

Pakistan is among the Asian economies most exposed to the surge in energy prices caused by the Middle East crisis, which has disrupted the Strait of Hormuz and forced the shutdown of key energy facilities in Qatar and other parts of the region. The country depends heavily on Gulf nations for nearly all of its crude oil, refined fuel and liquefied natural gas imports.

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Schools shut, no salary for ministers

Among the fuel-saving measures announced, Pakistan will shut schools for two weeks from next week, while universities will shift to online classes. Cabinet members will not draw a salary for next two months, and a ban has been imposed on unnecessary official foreign tours. Seminars and conferences will also be held in government buildings instead of hotels. Half of public sector employees will work from home except for those providing essential services.

Higher global oil prices could lead to additional increases in domestic fuel rates, a move that would likely feed into inflation and weigh on the rupee, which is sensitive to energy costs. Pakistan’s central bank kept its key interest rate unchanged on Monday, citing economic uncertainty.

A haunting history

During the previous energy crisis four years ago, Pakistan faced daily power outages and imposed energy-saving steps that slowed economic activity. In recent years, Sharif’s government has worked to stabilise the economy with loans from the International Monetary Fund (IMF). The administration had forecast economic growth of 4.2% for the fiscal year starting July 2025.

Investors fear that “rising oil prices will affect the economic stability achieved in last few years,” Mohammed Sohail, chief executive officer of Topline Securities, said before the austerity steps were announced.

The government last week said the country, heavily dependent on energy imports from the Gulf, had enough stock of petroleum products to meet national requirements for around four weeks. But the country’s largest gas distributor has already announced a cut in supplies to some of its industrial customers.

(With inputs from agencies)