Pakistan faces severe fuel-price shock as global oil surge deepens inflation, strains imports, widens fiscal pressure, and threatens economic stability amid rising public hardship.
New Delhi
Pakistan is facing its most serious fuel-price shock in more than 50 years, with rising global oil costs triggering wide-ranging economic risks, according to a recent report.
The surge has hit Pakistan particularly hard due to its heavy reliance on imported energy and remittances from Gulf countries. The country’s already fragile balance-of-payments position is expected to come under further pressure, worsening macroeconomic instability.
Prime Minister Shehbaz Sharif said the oil import bill has nearly tripled to $800 million from $300 million before the current global disruptions, wiping out recent economic gains. The spike is expected to ripple across sectors including agriculture, transport, and food supply chains, pushing up inflation and deepening the cost-of-living crisis.
Economists warn that higher fuel prices typically reduce purchasing power, slow economic activity, and increase unemployment and poverty. The situation has also intensified political pressure on the government amid rising public dissatisfaction.
In response, the State Bank of Pakistan raised its policy rate to 11.5 per cent, citing heightened global energy costs, freight charges, and supply chain disruptions. However, policymakers face difficult choices between raising consumer fuel prices or increasing subsidies, both of which carry fiscal risks.
International financial constraints, including conditions set by the IMF, further limit Pakistan’s ability to expand subsidies, adding to fiscal stress and economic uncertainty.
