The energy shock caused by the US-Israel war on Iran has led Pakistan to take various steps to mitigate the effect of the fuel hikes on an urgent basis. This includes closing markets at 8pm, something reportedly being implemented across the country, except Sindh. While it is unclear how long such measures will last now that there is a ceasefire, I think this particular measure deserves a second look. While it would reduce fuel demand it would also limit economic activity all over the country, which is going to create a heavy burden for the government in the long run. Disrupting the economic flow will not only result in economic loss but will also cause a decline in government revenue.
Shorter working days means lesser income and so lower tax collection. This way, the whole mechanism will undergo stagnation. Increase the oil prices to discourage demand or limit the economic flow; the economy has to encounter a downturn either way. However, acknowledging circumstances and avoiding intervention might minimise the economic contraction.
Hasnain Mir
Islamabad
