In response to escalating global oil prices and the ongoing conflict in the Middle East, Pakistan has introduced a series of stringent austerity measures aimed at curbing government expenditure and stabilizing the national economy. These measures were finalized during a high-level meeting led by Prime Minister Shehbaz Sharif, which included participation from chief ministers of all four provinces, as well as leaders from Gilgit-Baltistan and Azad Jammu and Kashmir.
The new austerity policy mandates a complete halt on the procurement of new durable goods and government vehicles until June 2026, signaling a significant effort to reduce unnecessary spending. This ban extends to all ministries, departments, autonomous bodies, the judiciary, and parliament, ensuring a uniform application across the entire government structure. Additionally, any IT-related purchases will now require a thorough review by the National IT Board (NITB) and subsequent approval from a designated scrutiny committee, introducing a layer of oversight to curb excess.
One of the most impactful restrictions involves a suspension on all official foreign travel for cabinet members, parliamentarians, and government officials at both federal and provincial levels. Exceptions will only be made for essential official missions, and even then, officials must travel in economy class. This travel ban applies regardless of whether the trips are funded by government resources or international donors, reflecting the government’s commitment to austerity in every possible area.
Fuel consumption for government vehicles is set to be slashed by 50 percent over the next two months, a move expected to save approximately Rs4.5 billion at the federal level. However, operational vehicles such as ambulances, buses, and motorcycles will be exempt from this reduction to maintain essential services. Furthermore, 60 percent of government vehicles at both federal and provincial levels will be grounded during this period, and the acquisition of new vehicles has been completely prohibited until mid-2026.
In addition to these measures, the government is advancing its right-sizing programme, which aims to optimize the size and expenditure of the public sector workforce. Financial savings targets related to this initiative are anticipated to be incorporated into the upcoming budget. To further reduce costs, teleconferencing and virtual meetings will be promoted as alternatives to physical gatherings. Official state banquets have been suspended, except those involving foreign delegations, and all government seminars, trainings, and conferences will require prior approval from a special committee tasked with assessing their necessity and priority. These events must also be held in government auditoriums or official venues to minimize expenses.
On the salary front, ministers, advisers, and special assistants at both federal and provincial levels have agreed to voluntarily forgo their salaries and allowances for two months. Additionally, senior government officials in Grade 20 and above, earning more than Rs300,000 monthly, will face a mandatory two-day salary deduction. These steps are designed to demonstrate solidarity and shared sacrifice among the leadership during this challenging economic period.
Finally, all federal and provincial departments will implement a 20 percent reduction in non-development budget spending for the final quarter of the fiscal year. This cutback is projected to save around Rs22 billion at the federal level alone, underscoring the government’s resolve to tighten fiscal discipline across the board. These austerity measures come at a critical time as Pakistan navigates the dual pressures of global economic instability and regional geopolitical tensions, reflecting a concerted effort to safeguard the country’s financial health.
