Pakistan’s economic stability is under threat as the weekly oil bill skyrockets amid ongoing geopolitical tensions. As of early Tuesday, the weekly oil bill reached $800 million, a sharp rise from the previous $300 million.
The State Bank of Pakistan (SBP) responded by raising its key policy rate by 100 basis points to 11.5%. This decision aims to protect foreign exchange reserves and prevent further pressure on the rupee.
Headline inflation rose to 7.3% in March 2026, while core inflation edged up to 7.8%. Officials anticipate that inflation will remain above the medium-term target range of 5-7% for much of the next fiscal year.
Prime Minister Shehbaz Sharif highlighted the impact of the Middle East conflict on Pakistan’s economy. “Our weekly pre-war oil bill was around $300 million, and today it is up to $800 million,” he stated.
Key facts:
- The SBP’s rate hike was described as a ‘pre-emptive move’ to contain inflation.
- Remittances finance more than 100% of Pakistan’s trade imbalance.
- Foreign exchange reserves improved due to external financing inflows and debt rollovers.
- Pakistan recently paid back a $3.45 billion deposit to the UAE, while Saudi Arabia transferred a $3 billion deposit.
The ongoing conflict in the Middle East has complicated Pakistan’s macroeconomic outlook. The Prime Minister noted that previous efforts to stabilize the economy have faced setbacks due to these external pressures.
Experts warn that if oil prices continue to rise, Pakistan may face significant challenges in managing its economic stability and inflation rates moving forward.
