Pakistan extends austerity measures amid uncertainty over Iran-US tensions

Pakistan has extended its nationwide austerity measures until 13 June as uncertainty surrounding the conflict in West Asia continues to weigh heavily on the country’s economy and energy security.

Prime Minister Shehbaz Sharif approved the extension following the failure of the United States and Iran to reach an agreement aimed at ending months of hostilities in the region. The decision came after US President Donald Trump reportedly rejected Tehran’s latest proposal for a settlement, describing it as “totally unacceptable”.

The austerity measures were first introduced on 9 March after disruptions to energy supplies triggered by military action involving the US, Israel and Iran. The restrictions had initially been scheduled to remain in place for two months.

According to a notification issued by Pakistan’s Cabinet Division on Monday, the government decided to continue the measures immediately after reviewing recommendations submitted by a committee overseeing fuel conservation and austerity implementation.

Under the extended restrictions, fuel allocations for official vehicles will remain reduced by 50 per cent, although emergency and operational vehicles such as ambulances and public transport buses are exempt.

The government has also retained its decision to ground 60 per cent of official vehicles and continue a ban on most foreign visits, except those deemed essential to national interests.

Pakistan’s economy remains highly vulnerable to disruptions in oil supplies from West Asia, and the conflict involving Iran has intensified concerns over energy availability and rising import costs. The country has already witnessed significant increases in fuel prices despite the austerity campaign.

The conflict began after coordinated strikes by the US and Israel on Iranian targets, followed by retaliatory action from Tehran. Although a ceasefire has been in place since 8 April, tensions remain high as negotiations continue to stall.

Islamabad hosted a round of direct talks between Iranian and American officials on 11 April, but no breakthrough was achieved. Key disagreements reportedly persist over Iran’s nuclear enrichment activities and the security of the Strait of Hormuz, a critical global oil transit route.

On 21 April, Trump extended the ceasefire indefinitely beyond its initial deadline to provide additional time for diplomacy.

Regional instability has continued despite the truce. Recent reports of drone incursions into the airspace of the United Arab Emirates and Kuwait, along with a drone strike that caused a minor fire aboard a commercial vessel near Qatar, have raised fresh concerns over the durability of the ceasefire and the broader security situation in the Gulf.

With PTI inputs