ISLAMABAD: Pakistan’s economy came under pressure due to the US-Israeli war in Iran, Prime Minister Shehbaz Sharif said on Wednesday, though the government managed to withstand the financial shock with the timely support extended by Saudi Arabia.
The conflict has rattled global trade and energy supplies, with tensions in the Strait of Hormuz driving up oil prices and import costs for countries like Pakistan that rely heavily on fuel imports.
Islamabad has also navigated the repayment of external debt, including $1.4 billion in Eurobonds and $2 billion owed to the United Arab Emirates, amid concerns related to its foreign exchange reserves.
“Allah Almighty had placed our economy on a macro level, and we were growing in numbers, but as a result of this sudden war, our efforts made in the last two years have gone down. You and I have no say in this,” Sharif said, addressing a federal cabinet meeting, as he prayed for an end to the war and a return to economic stability.
The prime minister said the surge in global oil prices had significantly increased Pakistan’s import bill, describing the situation as “very challenging” for the country’s finances.
“If a week ago our bill was $300 million, today it has reached $800 million,” he said, adding that authorities were monitoring prices daily and had taken austerity and conservation measures to manage consumption.
Despite the pressure, he pointed out that the government had avoided fuel shortages or rationing seen elsewhere, crediting coordinated efforts by the petroleum ministry.
“Our bilateral due loans of $3.5 billion have been paid,” he continued. “Our federal reserves are also on the same level ... For this, we are very grateful to our respected brother, [Crown Prince] Mohammed bin Salman, and the King of Saudi Arabia.”
Riyadh this month committed $3 billion in additional financial support to Pakistan, while also agreeing to extend an existing $5 billion deposit, providing a crucial boost to Pakistan’s foreign exchange reserves, according to Finance Minister Muhammad Aurangzeb.
Sharif said the government would continue working to keep the economy on track despite external shocks.
Pakistan has also sought to play a diplomatic role in ending the war, hosting a 21-hour round of talks between US and Iranian officials earlier this month following a ceasefire, though a second round of negotiations has yet to take place.
The stalled peace process has contributed to renewed volatility in oil markets, compounding the challenges for import-dependent economies like Pakistan.
“In the lives of nations, there are times like this,” Sharif said. “Nations that face this with courage, hard work and unity are always successful.”
Separately, Saudi Ambassador Nawaf bin Saeed Al-Malky called on Deputy PM Ishaq Dar to discuss regional developments, Pakistan's foreign office said.
Dar stressed the importance of dialogue and engagement for regional peace and stability.
"He expressed gratitude for Saudi Arabia’s support and appreciation of Pakistan’s ongoing efforts in this regard," the foreign office said.
