New Delhi, March 16 – Pakistan has been severely affected by the Middle East crisis due to the war between Iran and Israel-United States. While it faces several challenges regarding whether or not to join the war due to an agreement with Saudi Arabia, the economic situation in Islamabad has worsened. The Middle East crisis comes at a time when Pakistan is already economically strained.
Adding to its woes is its conflict with Afghanistan and its constant struggle with the Tehreek-e-Taliban Pakistan (TTP) and the Balochistan Liberation Army (BLA). Officials say that these conflicts are not only impacting Pakistan militarily, but also economically.
The official stated that the situation for Pakistan is so precarious that it must protect whatever remains of its economy. Islamabad has now introduced several measures to protect its economy and has announced numerous cuts in various sectors.
A decision has been made to reduce the use of official vehicles in federal and provincial government departments by 60 per cent. Grade-20 officials in government offices who earn over Rs 300,000 have been asked to voluntarily give up two days' salary. However, this does not apply to those in the health and education sectors.
The government has also instructed members of both the provincial and federal legislatures to take a 25 per cent cut in salaries and allowances for two months. Another significant step taken by the Pakistani government is to reduce the supply of petroleum for official vehicles by 50 per cent.
Cabinet ministers, ministers of state, special assistants to the Prime Minister, and advisors will have to forgo their entire salaries for two months. Non-essential expenditure by federal and provincial government departments will be reduced by 20 per cent. There will be no more travel in business class for officials.
All officials will have to travel only in economy class while traveling abroad. Only essential foreign trips can be made by ministers, parliamentarians, and officials. There is a complete ban on the purchase of new durable goods for government offices. An exception has been made for limited purchases for IT procurement after thorough scrutiny. All meetings in government departments will now be virtual.
This decision has been taken to reduce both travel and accommodation costs. The existing ban on the purchase of new government vehicles will continue until June 2026. Except for the banking sector and those involved in essential services, all government offices will operate only four days a week.
Government seminars, training sessions, and conferences will require prior scrutiny and approval before they can be organized.
The Pakistani government has advised similar guidelines for the private sector. However, this is not mandatory. Experts say that the country is deeply in debt. If the Middle East crisis prolongs, all the cost-cutting measures taken by Pakistan will not be effective.
A prolonged crisis will not only hurt the Pakistani economy, but also lead to its collapse, experts say. Normally, there is some increase in business during Eid.
However, all these disruptions have slowed down retail activity, and people are only purchasing essentials, as they did in the past during the same period. Many in Pakistan are questioning the need to raise oil prices by 20 per cent on March 6. The decision to curb hoarding of oil has backfired, as it has hit people hard.
This has affected the agricultural sector, which accounts for 23 per cent of the country's economy. People are finding it difficult to commute as the rise in oil prices has made travelling by taxis and rickshaws very expensive. This decision has also had a major impact on food delivery riders.
Their earnings have been wiped out, and they are now living on charity. The riders are complaining that their earnings have been wiped out, and they are forced to rely on charity. There has also been market volatility on the Pakistan Stock Exchange, with a historic one-day drop of 16,089 points.
Officials say that it is not just the global crisis that is causing Pakistan's collapse. It is the prolonged conflict with the BLA and TTP, and the war in Afghanistan, which are making matters worse for the Pakistani economy. In the last 20 years, Pakistan has lost $152 billion due to various wars, including the war on terror in Afghanistan.
Experts say that if the conflict in Afghanistan continues, matters could get even worse for Pakistan.