The federal government has asked provinces to share the burden of petroleum subsidies as Pakistan grapples with rising economic pressures triggered by ongoing regional conflict, officials said on Thursday.

The proposal was discussed at a high-level meeting chaired by Prime Minister Shehbaz Sharif, attended by Chief of Army Staff and Chief of Defence Forces Field Marshal Syed Asim Munir, Deputy Prime Minister Ishaq Dar, Pakistan Peoples Party Chairman Bilawal Bhutto Zardari, chief ministers of all four provinces, the Gilgit-Baltistan leadership and the prime minister of Azad Jammu and Kashmir.

According to sources, the federal government urged provinces to contribute towards subsidies on petroleum products, as authorities weigh options to manage the fiscal impact of surging global oil prices. The meeting also reviewed the possibility of passing the full burden of fuel price increases onto consumers.

Addressing participants, the prime minister stressed the need for a coordinated national response to protect vulnerable segments, as well as the agriculture and transport sectors, from the fallout of the regional war, now in its second month.

He said Pakistan had made sustained diplomatic efforts to de-escalate tensions, while highlighting the role of Ishaq Dar and Field Marshal Asim Munir in promoting peace.

PM Shehbaz warned that the conflict poses serious risks to the country’s economic stability, noting that hard-won gains in stabilisation could come under pressure.

“Pakistan was on the path to progress, but the current situation presents fresh challenges,” he said.

The premier revealed that the government had initially passed on only Rs55 per litre of petroleum price adjustments to consumers, while absorbing the remaining impact through relief measures worth Rs129 billion. This included the diversion of Rs100 billion from development funds.

Officials briefed the meeting on austerity and energy conservation measures, with the prime minister urging strict implementation to ease fiscal strain.

He commended the cooperation of provincial governments and political stakeholders in executing the austerity drive, stressing that collective action would be essential to protect low-income groups in the face of mounting economic headwinds.