The contingency arrived in April. The plan was ordered in July.
On July 16, Prime Minister Shehbaz Sharif chaired a meeting to review the economic impact of regional tensions and directed officials to produce a comprehensive contingency plan so that “timely steps could be taken if needed.” Officials briefed the meeting that petroleum reserves were sufficient and supply arrangements were in place. The economy, he said, was currently stable.
The meeting was not wrong, exactly. Pakistan does need a structured plan. The contingency plan the PM ordered is presumably a scenario-modelling exercise: what happens to the current account deficit if LNG prices rise another 15%? What lever does the government pull if the petrol price, already at Rs310.71 per litre, reaches Rs340 at the next fortnightly revision? How does the fiscal position hold if the IMF programme targets on inflation and the primary surplus are simultaneously under pressure from energy import costs?
These are serious questions that deserve careful answers, and it is better to have a plan than not.
The problem is the word “if.”
The Strait of Hormuz crisis began when the US struck Iran in April. Pakistan’s petrol price has been rising, in fortnightly steps, since May. The ADB cut its growth forecast for Pakistan’s FY27 from 4.5% to 3.7% because the Middle East energy disruption had already weighed on the region more than anticipated. The Iranian oil tankers that briefly signalled Karachi before reversing course on July 15 were not a warning of a future risk — they were a present condition translated into a concrete image.
The contingency that warrants a plan is not a hypothetical escalation from a hypothetical baseline. It is an escalation from a baseline that is already well above where Pakistan wanted to be. The plan is needed for an economy that is absorbing costs it did not budget for, under an IMF programme that does not leave much room to absorb them, with a petroleum levy already at a record high, and a mediator role that requires maintaining equidistance with both the country enforcing the blockade and the country being blockaded.
A contingency plan for this is a serious piece of work. What happens to the programme if the SBP has to use reserves to stabilise the rupee? What is the government’s position if the IMF’s next review finds the primary surplus target slipping because of higher energy subsidies? What does Pakistan say to Washington if the question of Iranian oil arrives more formally than two tankers making a U-turn?
The plan should exist. The harder question is whether a government that ordered the plan in July for a contingency that arrived in April is planning fast enough for what comes next.
