Middle East conflict may inflict up to $68b loss on national economy, NA told

Expert briefs committee that the annual impact of 51 days of war on economy is in the range of $10-14b

The Middle East conflict could cause $10-68 billion in annual losses to Pakistan’s economy, and inflation could hit 17% in an extreme oil price volatility situation, said an economist in a briefing to the National Assembly Standing Committee on Finance on Thursday.

The three different impact scenarios that Ali Salman, who is also head of the Policy Research and Market Economy institute, showed that in case of a severe shock, the remittances could go down by 40% while exports may dip by almost 50% against their current monthly levels.

Despite the extreme nature of the crisis, the government is not showing any sense of responsibility. The finance ministry got a bill approved from the same standing committee.

Read: Global oil price retreats after hitting 4-year high on concern of US-Iran war escalation

The committee gave the authority to the ministry to appoint an unlimited number of directors in the debt management office. The move is also in breach of the prime minister’s austerity campaign.

Chairman of the National Assembly Standing Committee on Finance, Syed Naveed Qamar, had arranged the briefing for the benefit of the legislators.

The National Assembly Standing Committee on Finance and Revenue met under the Chairmanship of Syed NaveedQamar, MNA at Parliament House today.@NAofPakistan @naveedqamarmna#NACommittee pic.twitter.com/7k9N7f9MNJ

— Committees of NA (@NA_Committees) April 30, 2026

There could be a minimum of $10b to a maximum of $50b loss in three different scenarios of the war, Salman said.

The number of losses that were predicted was many times more than Pakistan’s current three-year $7b International Monetary Fund programme, Qamar remarked.

The war began on February 28th. Although Israel and the United States are not attacking Iran anymore, Iran has virtually closed the Strait of Hormuz, while the US has enforced a naval blockade to disrupt Iranian oil shipments.

Inflation is a major challenge that will impact the entire macroeconomic framework of the country, Salman said.

Current Scenario

While presenting three different shock scenarios, Salman briefed the committee that the annual impact of 51 days of war on Pakistan’s economy was in the range of $10-14b.

This included a $334 million additional per-month impact of oil imports, a $333m estimated reduction in monthly remittances, a $400m impact on exports and a $100m monthly increase in freight charges. Inflation was projected to stay in the range of 10-12%.

Prime Minister Shehbaz Sharif said on Wednesday that the weekly oil import bill had already jumped from $300m to $800m.

Adverse Scenario

In case of adverse impact where the war continued for three months, Salman said the annual impact would be in the range of $24-32b.

He assessed that the oil import bill could increase by $1b per month, remittances could go down by $700m per month, exports could take a hit of $800m per month and the war risk impact was $150m per month. Inflation could go up 13-15%.

Pakistan’s normal-time monthly remittances were around $3.8b, while its exports were roughly $2.5b a month.

Severe Scenario

In case of a severe shock where oil prices could go as high as $150 per barrel, Pakistan’s economy may take an annual hit of $50-68b, Salman said. The monthly impact was $5.7b in this severe case.

In the severe case scenario, the monthly oil import bill could increase by $2.8b, and remittances could go down by $1.5b a month, which was about 40% of the current level. Exports could take a hit of $1.2b, which was equal to half of the current export receipts.

The war risk surcharges could go as high as $5.7b a month, and inflation may increase to 17%, he added.

The estimates shared by the economist with the standing committee thus far were the highest and were equal to 17% of the size of Pakistan’s economy.

Also Read: PM Shehbaz extends fuel subsidy for transport sector by one month

Salman said that the oil price hike had already added approximately $4b in additional external payments by April 30, or in two months.

He said that the cabinet salary cuts for two months, coupled with a 25% reduction in the salaries of the legislators, would save between Rs85-100m.

Despite the difficult economic times, for the Ministry of Finance, it was business as usual. It moved a bill to amend the Fiscal Responsibility and Debt Limitation Act, which the standing committee also approved.

The purpose of these amendments was not to control public debt but to get powers to appoint as many directors in the debt office as the finance ministry deemed fit.

MNA Sharmila Faruqi objected to giving powers to appoint an unlimited number of directors. Qamar said that he knew that appointing more directors would not change anything. "This should not be used as an excuse for not managing debt," he said.

MNA Jawad Hanif Khan questioned whether the Ministry of Finance was showing eagerness to appoint more directors, but the post of director general had been vacant for months.

Omar Khan, who is leading the debt office and is not an employee of the federal government, could not give a satisfactory response except saying that the post had already been advertised.

MNA Hina Rabbani Khar asked why the Ministry of Finance was not able to observe the 56% debt-to-GDP limit.

Read More: Oil shock, falling investment threaten growth outlook

The debt-to-GDP ratio in the last fiscal year remained at 70.7%, Khan admitted.

Khan proposed that an amendment should be made to bind the finance ministry to report to Parliament whenever the statutory debt limit was breached.

However, Minister of State for Finance Bilal Azhar Kayani said that the debt limit was not a border that you cross and report when you come back. He was of the view that the statutory debt limit was an aspirational clause, but Qamar did not agree with it.