The government on Thursday unveiled a targeted subsidy package aimed at cushioning the impact of a sharp increase in petroleum prices, as global oil markets remain volatile due to escalating regional tensions.
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The announcement came shortly after fuel prices surged to historic highs, intensifying pressure on consumers already grappling with inflation.
Shift from blanket to targeted relief-Support for vulnerable sectors
Finance Minister Muhammad Aurangzeb said the government had opted for a targeted subsidy mechanism to ensure relief reaches the most deserving segments, rather than continuing costly blanket subsidies. He noted that previous broad-based subsidies had become fiscally unsustainable amid soaring global oil prices.
Petrol prices have climbed to Rs458.40 per litre, while high-speed diesel reached Rs520.35 per litre, reflecting a sharp spike in international crude oil rates driven by geopolitical tensions in the Middle East.
The government said the new subsidy framework would primarily focus on low-income groups, including small farmers, motorcyclists, and public transport operators. These segments are considered most vulnerable to rising fuel costs, which directly affect mobility, agricultural output, and supply chains.
Officials emphasized that the targeted approach would allow better allocation of limited fiscal resources while ensuring that relief measures remain effective and sustainable. The government had already spent significant amounts in recent weeks to shield consumers from rising fuel costs but acknowledged that continuing such support was no longer viable.
Petroleum Minister Ali Pervaiz Malik said the increase in fuel prices was unavoidable due to surging global oil markets and ongoing geopolitical instability. He added that Pakistan, being heavily reliant on imported energy, has limited capacity to absorb international price shocks.
The surge in fuel prices is expected to have a ripple effect across the economy, driving up transportation and food costs and adding to inflationary pressures. Analysts warn that lower-income households are likely to bear the brunt of the increase, making targeted relief measures critical in the current scenario.
The latest move reflects the government’s attempt to strike a balance between economic stability and social protection, as policymakers navigate the dual challenges of rising global energy prices and constrained fiscal space.