Pakistan looks to tame high inflation with fuel price cuts — PM

An employee fills petrol in a motorcycle at a fuel station in Lahore, Pakistan, on August 1, 2023. (AFP/File)
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Updated 16 October 2023
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Pakistan looks to tame high inflation with fuel price cuts — PM

  • Pakistan is embarking on a tricky path to economic recovery under a caretaker government after a $3 billion IMF bailout
  • Effective Monday, petrol dropped by Rs40 to Rs283.38 rupees a litre, while high-speed diesel cost fell by Rs15 to Rs303.18

KARACHI: The Pakistani government is looking to tame inflation with fuel price cuts and a price-control mechanism, caretaker Prime Minister Anwaar ul Haq Kakar said on Monday. 

The South Asian country is embarking on a tricky path to economic recovery under a caretaker government after a $3 billion loan programme approved by the International Monetary Fund in July averted a sovereign debt default, but with conditions that complicated efforts to control inflation. 

"Consequent to substantial reduction in fuel prices, I have directed the concerned authorities at Federal and Provincial level to activate a strict price control mechanism," Kakar said in a post on X, formerly known as Twitter. 

He added that efforts should be maintained in transferring the benefit of the cut on prices of commodities. 

Effective Monday, the price of petrol dropped by 40 Pakistani rupees to 283.38 rupees a litre, while high-speed diesel cost fell by 15 rupees to 303.18 a litre, as per the ministry. 

The finance ministry, in a press release, said the decreasing trend of petroleum prices in the international market and the appreciation of the rupee against the U.S. dollar as reasons for the cut. 

Pakistan's inflation rate rose to 31.4% year-on-year in September from 27.4% in August, primarily due to high fuel and energy prices. 

The rupee hit all-time lows in August before recovering in September to become the best performing currency following a clampdown by authorities on unregulated FX trade. 

Analysts, however, expect the fuel price cut to be short- lived and ineffective at taming inflation. 

"The current cut in fuel prices has been led by a lower ex-refinery price, which is a function of international prices and the rupee parity. The sustainability of this cut is subject to future movements in these factors," said Amreen Soorani, Head Of Research at JS Global Capital. 

She added that the crackdown in illicit trade had been a key factor in the appreciating rupee against the dollar and that continued efforts on the same path would likely keep the rupee trend stable. 

"Pakistan is a trade deficit country with limited dollar inflow avenues in its balance of payments. In the longer term, present information suggests the rupee would likely continue a depreciating trend, albeit, ongoing efforts may limit the quantum of depreciation," she added. 

Fahad Rauf, Head of Research at Ismail Iqbal Securities, pointed out the downward sticky nature of prices. 

"When the fuel prices go up, the transportation cost and product prices also rise, but when the prices fall, the impact is not passed on to consumers to same extent," Rauf added. 

The war between Islamist group Hamas and Israel poses one of the most significant geopolitical risks to oil markets since Russia's invasion of Ukraine last year, analysts say. 

"...we believe the oil price warrants a risk premium of USD5–10/bbl, due to the supply risk," ANZ research said in a note on Monday. 


Pakistan puts border districts on high alert amid Iran protests — official

Updated 10 min 22 sec ago
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Pakistan puts border districts on high alert amid Iran protests — official

  • The development comes as Iranian authorities try to suppress protests over faltering economy, with over 2,600 killed
  • Militancy in Balochistan has declined following the return of nearly 1 million Afghans, the additional chief secretary says

QUETTA: Pakistan has heightened security along districts bordering Iran as violent protests continue to engulf several Iranian cities, a top official in Pakistan’s southwestern Balochistan province said on Thursday, with authorities stepping up vigilance to guard against potential spillover.

The development comes as Iranian authorities try to suppress protests, which began late last month over the country’s faltering economy and the collapse of its currency, with more than 2,600 killed in weeks of violence in the Islamic republic.

The clampdown on demonstrations, the worst since the country’s 1979 Islamic revolution, has drawn threats from the United States (US) of a military intervention on behalf of the protesters, raising fears of further tensions in an already volatile region.

Pakistan, which shares a 909-kilometer-long border with Iran in its southwest, has said that it is closely monitoring the situation in the neighboring country and advised its citizens to keep essential travel documents with them amid the unrest.

“The federal government is monitoring the situation regarding what is happening in Iran and the provincial government is in touch with the federal government,” Hamza Shafqaat, an additional chief secretary at the Balochistan Home Department, told Arab News in an exclusive interview on Thursday.

“As far as the law and order is concerned in all bordering districts with Iran, we are on high alert and as of now, the situation is very normal and peaceful at the border.”

Asked whether Islamabad had suspended cross-border movement and trade with Iran, Shafqaat said trade was ongoing, but movement of tourists and pilgrims had been stopped.

“There were few students stuck in Iran, they were evacuated, and they reached Gwadar,” he said. “Around 200 students are being shifted to their home districts.”

SITUATION ON PAKISTAN-AFGHANISTAN BORDER

Pakistan’s Balochistan province has long been the site of an insurgency by ethnic Baloch separatists and religiously motivated groups like the Tehreek e Taliban Pakistan (TTP). Besides Iran, the province shares more around 1,000-kilometer porous border with Afghanistan.

Islamabad has frequently accused Afghanistan of allowing its soil for attacks against Pakistan, an allegation denied by Kabul. In Oct., Pakistan and Afghanistan engaged in worst border clashes in decades over a surge in militancy in Pakistan. While the neighbors agreed to a ceasefire in Doha that month, relations between them remain tensed.

Asked about the government’s measures to secure the border with Afghanistan, Shafqaat said militancy in the region had declined following the return of nearly 1 million Afghan nationals as part of a repatriation drive Islamabad announced in late 2023.

“There is news that some of them keep on coming back from one border post or some other areas because we share a porous border and it is very difficult to man every inch of this border,” he said.

“On any intervention from the Afghanistan side, our security agencies which are deputed at the border are taking daily actions.”

LAW AND ORDER CHALLENGE

Balochistan witnessed 167 bomb blasts among over 900 militant attacks in 2025, which killed more than 400 people, according to the provincial government’s annual law and order report. But officials say the law-and-order situation had improved as compared to the previous year.

“More than 720 terrorists were killed in 2025 which is a higher number of operations against terrorists in many decades, while over a hundred terrorists were detained by law enforcement agencies in 90,000-plus security operations in Balochistan,” Shafqaat said.

The provincial government often suspended mobile Internet service in the southwestern province on various occasions last year, aimed at ensuring security in Balochistan.

“With that step, I am sure we were able to secure hundreds of lives,” Shafqaat said, adding it was only suspended in certain areas for less than 25 days last year.

“The Internet service through wireless routers remained open for the people in the entire year, we closed mobile Internet only for people on the roads because the government understands the difficulties of students and business community hence we are trying to reduce the closure of mobile Internet.”