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Pakistan hikes policy rate to 11.5% as fuel bill triples.

5/2/2026

40 8 Full Breakdown

Summary

Story summary

The State Bank of Pakistan raised its policy rate by one point to 11.5% because of heightened Middle East war risks.
Pakistan’s fuel import bill jumped from $300 million to $800 million, sparking fears of a cascading economic crisis.
Analysts say the surge threatens to reverse two years of economic progress.
Opposition leaders accuse Prime Minister Shehbaz Sharif’s government of imposing an economic war by not securing IMF-backed fuel subsidies.

History

Historical Context

During the 1973 OAPEC oil embargo, Saudi Arabia helped lift world prices from $3 to $12 a barrel, cutting exports by up to 70% and sparking a $500 million jump in Pakistan’s fuel imports. Echoing that shock, Pakistan’s State Bank, led by Governor Murtaza Syed, raised its policy rate to 11.5% as import bills surged from $300 million to $800 million.

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Story summary

The State Bank of Pakistan raised its policy rate by one point to 11.5% because of heightened Middle East war risks.
Pakistan’s fuel import bill jumped from $300 million to $800 million, sparking fears of a cascading economic crisis.
Analysts say the surge threatens to reverse two years of economic progress.
Opposition leaders accuse Prime Minister Shehbaz Sharif’s government of imposing an economic war by not securing IMF-backed fuel subsidies.

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