The Cabinet Division Pakistan has issued a notification announcing new austerity and fuel-saving measures aimed at reducing government expenditure across federal institutions.
The measures were approved by Shehbaz Sharif following recommendations from the Committee for Monitoring and Implementation of Fuel Conservation and Additional Austerity Measures.
Temporary Salary Cuts for Senior Officials
Under the new policy, senior management officials in state-owned enterprises, autonomous bodies, statutory authorities, and regulatory institutions will face a two-month temporary salary reduction.
The cuts will apply to gross salaries of chief executive officers, executive directors, directors, and senior managers.
The salary reduction structure will be:
- 5% cut for salaries between Rs300,000 and Rs1 million
- 15% cut for salaries between Rs1 million and Rs2 million
- 25% cut for salaries between Rs2 million and Rs3 million
- 30% cut for salaries above Rs3 million
All deducted amounts will be deposited into the Prime Minister’s Austerity Fund 2026.
Board Fees Also Directed to Austerity Fund
The government has also directed that 100% of board fees paid to government nominees serving on boards of state-owned enterprises, statutory bodies, and private companies be transferred to the austerity fund for the next two months.
Spending Cuts for Overseas Missions
The Ministry of Foreign Affairs Pakistan has been instructed to adopt austerity measures at diplomatic missions abroad.
Key measures include:
- Simple flag-hoisting ceremonies on March 23 instead of receptions at overseas missions
- 20% reduction in non-ERE budgets for foreign missions
- Two-day salary deduction for staff posted abroad
However, obligations such as rent, education fees, and medical expenses will continue to be paid.
Ban on Official Foreign Travel
The government has imposed a complete ban on foreign visits and official overseas travel for two months, including participation in obligatory events.
If Pakistan’s presence is required, the country will be represented by ambassadors or high commissioners already stationed abroad.
Fully funded short- and long-term training programs offered by international financial or development institutions will remain exempt from the ban.
Exemptions for Revenue and Security Agencies
Due to operational needs, the Federal Board of Revenue Pakistan and institutions under the Revenue Division will not follow the previously announced work-from-home policy or four-day workweek.
Vehicles used for Customs enforcement operations and the Inland Revenue Enforcement Network (IREN) will also be exempt from general restrictions on fuel use and vehicle grounding.
However, the FBR has been instructed to achieve overall fuel reduction targets through adjustments in other departments.
Similarly, law enforcement agencies and the armed forces will remain exempt from work-from-home arrangements due to security requirements. Departments not directly involved in ground operations will face:
- 50% reduction in fuel allocation
- Grounding of 60% of official vehicles
Monitoring and Compliance
To ensure compliance, federal institutions and provincial governments must submit weekly implementation reports through a digital portal developed by the Ministry of Information Technology and Telecommunication Pakistan.
The Intelligence Bureau Pakistan will conduct a comprehensive audit of fuel reductions and vehicle grounding, submitting weekly reports to the prime minister and the monitoring committee.
Additional Administrative Measures
The IT ministry has also been instructed to provide APN devices for the e-Office system within four days, while ministries and divisions must submit their device requirements immediately.
In addition, a subcommittee led by the Finance Secretary of Pakistan, including provincial finance secretaries, has been formed to design a mechanism for transferring savings generated through these austerity measures into the Prime Minister’s Austerity Fund 2026.
The committee will present its recommendations at the next meeting.
