Pakistan to close schools, take other measures to cut energy as oil spikes

Pakistan's Prime Minister Shehbaz Sharif said schools would close for two weeks and announced sweeping cuts to government fuel use and spending on Monday (March 9), saying surging oil prices triggered by the war with Iran were threatening to destabilise the economy.

In a televised address to the nation, Sharif said the government would slash fuel consumption across government departments, shift many public services online, and impose strict curbs on spending to cope with the shock of higher energy import prices. Pakistan imports most of its energy.

Under the new measures, all schools will close for two weeks from next week, while universities will shift to online classes immediately to reduce commuting. Government departments will face a 50% cut in fuel allowances for two months, and 60% of official vehicles – excluding buses and ambulances – will be taken off the road, Sharif said.

He also announced that only 50% of staff will work in offices, except in essential services, and government offices will operate a four-day week. Departmental spending will be cut by 20%, with bans on the purchase of vehicles, air conditioners and furniture, and most foreign travel by ministers and officials will be restricted.

In Karachi, some residents welcomed the steps as necessary. Liaquat Mughal said the prime minister had taken timely action to "minimise the negative impact on our economy."

Another resident, Saad Sharif, expressed hope that an end to the war would lower global prices, allowing Pakistanis to "live their lives as usual."

In Lahore, however, the school closures drew sharp criticism from small traders. Khizar Ali, a book shop worker, said the announcement had immediate consequences. "Look, as soon as the school closures were announced, the entire market emptied out," he said. "This is a bookshop, uniform shops - all empty. They've collected the fees, but now the schools are closed."

Pakistan last week raised petrol and diesel prices by 55 rupees ($0.1971) per litre, the largest increase on record, after global oil markets surged due to the conflict.

As Pakistan imports most of its energy, its inflation rate is highly sensitive to global fuel prices.

The central bank said earlier on Monday that rising global energy prices linked to the Middle East war had increased uncertainty around the inflation outlook, after the bank kept its policy rate unchanged at 10.5%.

($1 = 279.0000 Pakistani rupees)

Production: Rehan Sheilkh , Waseem Sattar, Salah Uddin, Yawar Afzal Malik/Reuters