THE renewed escalation of tensions between Iran and the United States has once again created uncertainty in global energy markets, with the risk of further pressure on international oil prices. In this situation, the government is considering reintroducing fuel conservation and austerity measures that were adopted earlier this year when the closure of the Strait of Hormuz had raised similar concerns.
If global oil prices continue to rise, the government may have little choice but to revive these measures to manage fuel consumption, reduce pressure on imports and contain the impact on the country’s external account. The measures introduced in March included a four-day working week, a 50 percent reduction in staff attendance, cuts in the use of official vehicles, greater reliance on online official meetings, restrictions on non-employee-related expenditure, a ban on foreign visits, speed limits on highways and motorways as well as reductions in salaries of high-end public sector earners. While such steps can help conserve energy and reduce unnecessary expenditure during a period of economic pressure, the government must ensure that they do not negatively affect industrial activity, productivity and economic growth. Industries, particularly export-oriented sectors, should remain fully operational as any disruption could have serious implications for employment, exports and overall economic recovery. Educational institutions are currently closed due to summer vacations and, therefore, are unlikely to face any immediate impact from these measures. However, whenever academic activities resume, decisions regarding online classes or other restrictions should be taken carefully to ensure that students’ education is not compromised. It is also important to acknowledge that certain departments were exempted from measures such as reduced working days and work-from-home arrangements due to the essential nature of their functions. Employees serving in these departments had to continue performing their duties while others benefited from reduced attendance or remote work. If similar measures are introduced again, the government should consider providing special compensation or incentives to such employees. Fuel conservation and austerity measures are difficult decisions, but in extraordinary circumstances, they can help the country navigate external shocks. However, their implementation must remain balanced, targeted and mindful of economic activity, essential services and the welfare of those who continue to shoulder additional responsibilities.
