Pakistan has introduced additional austerity and fuel conservation measures to reduce government expenditure and strengthen fiscal discipline, according to a Cabinet Division notification.
The measures, approved by Prime Minister Shehbaz Sharif following recommendations from the Committee for Monitoring and Implementation of Fuel Conservation and Additional Austerity Measures, include temporary salary reductions for senior officials and restrictions on government spending.
Under the new policy, senior management of state-owned enterprises, autonomous and statutory bodies, and regulatory authorities will face a two-month salary cut. The reductions will apply to the gross salaries of chief executive officers, executive directors, directors and senior managers.
Officials earning between Rs300,000 and Rs1 million will face a 5% salary deduction, those earning Rs1 million to Rs2 million will see a 15% cut, while salaries between Rs2 million and Rs3 million will be reduced by 25%. Officials earning above Rs3 million will face a 30% reduction for the two months. All deducted amounts will be deposited into the Prime Minister’s Austerity Fund 2026.
The government has also directed that 100% of board fees paid to government nominees serving on the boards of state-owned enterprises, statutory bodies and private-sector companies be deposited in the austerity fund during the same period.
As part of diplomatic spending cuts, the Ministry of Foreign Affairs Pakistan has been instructed to hold simple flag-hoisting ceremonies on March 23 instead of traditional receptions at Pakistan’s overseas missions. Foreign missions will also face a 20% reduction in their non-ERE budgets and a two-day salary deduction for staff. However, obligations such as rent, education fees and medical expenses will continue to be paid.
The notification also imposes a two-month ban on foreign visits and official overseas travel, including participation in obligatory events. In such cases, Pakistan’s ambassadors or high commissioners stationed abroad will represent the country. However, fully funded short- and long-term training programmes offered by international financial or development institutions will remain exempt.
Due to operational requirements, the Federal Board of Revenue and institutions under the Revenue Division will be exempt from previously announced work-from-home arrangements and the four-day workweek. Similarly, official vehicles used in Customs enforcement and Inland Revenue Enforcement Network (IREN) operations will not be subject to general fuel reduction and vehicle grounding measures, though the FBR has been instructed to meet overall fuel reduction targets through adjustments in other areas.
Law enforcement agencies and civil armed forces will also be exempt from work-from-home policies and the four-day workweek due to security considerations. However, departments not actively involved in ground-level operations will face a 50% reduction in fuel allocations and a requirement to park 60% of official vehicles.
The notification further calls for the rationalisation of security vehicles accompanying vulnerable dignitaries. At the same time, principal accounting officers have been directed to ensure that official vehicles are used strictly for official purposes.
To ensure compliance, federal institutions and provincial governments have been directed to submit weekly implementation reports via a digital portal developed by the Ministry of Information Technology and Telecommunication, Pakistan.
The Intelligence Bureau Pakistan will conduct a comprehensive audit of fuel allocation cuts and vehicle grounding, submitting weekly reports to the prime minister and the monitoring committee overseeing the austerity measures.
In addition, the IT ministry has been instructed to provide APN devices for the e-Office system within four days, while ministries and divisions have been asked to immediately submit their requirements.
A subcommittee led by the Finance Secretary of Pakistan and comprising provincial finance secretaries has also been established to develop a mechanism for transferring financial savings generated from these measures to the Prime Minister’s Austerity Fund 2026. The committee will present its recommendations at its next meeting.
