The Cabinet Division of Pakistan has issued a formal notification announcing additional austerity and fuel conservation measures aimed at reducing government expenditure amid mounting economic pressure.
The measures, approved by Shehbaz Sharif, were endorsed following recommendations from the Committee for Monitoring and Implementation of Fuel Conservation and Additional Austerity Measures. The notification was issued on March 14.
Under the new policy, senior management of state-owned enterprises, autonomous bodies, statutory authorities, and regulatory institutions will face a temporary two-month salary reduction. The cuts will apply to gross salaries of chief executive officers, executive directors, directors, and senior managers.
According to the notification, employees earning Rs300,000 to Rs1 million will face a 5% salary cut, while those earning Rs1 million to Rs2 million will see a 15% reduction.
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Officials with salaries between Rs2 million and Rs3 million will have 25% deducted, and those earning above Rs3 million will face a 30% reduction. All deducted amounts will be deposited into the Prime Minister’s Austerity Fund 2026.
In addition, 100% of board fees paid to government nominees serving on boards of public and private entities will also be transferred to the austerity fund for the next two months.
Diplomatic and Travel Spending Curtailed
As part of diplomatic cost-cutting, the Ministry of Foreign Affairs Pakistan has been directed to hold simple flag-hoisting ceremonies on March 23 instead of formal receptions at overseas missions.
Foreign missions will also face a 20% cut in non-ERE budgets and a two-day salary deduction for staff posted abroad, while essential expenses such as rent, education, and medical costs will continue to be covered.
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The government has also imposed a two-month ban on official foreign travel, including mandatory international events. Where participation is unavoidable, Pakistan’s ambassadors or high commissioners already posted abroad will represent the country. However, fully funded international training programmes will remain exempt.
Exemptions for Revenue and Security Institutions
Due to operational requirements, the Federal Board of Revenue Pakistan and its attached departments have been exempted from the previously announced work-from-home policy and four-day workweek.
Vehicles used for Customs and Inland Revenue Enforcement Network operations will also remain exempt from fuel restrictions, although the FBR has been instructed to meet fuel reduction targets through other adjustments.
Similarly, law enforcement agencies and the armed forces have been exempted from work-from-home measures due to security needs. Departments not directly involved in ground-level security will face a 50% fuel reduction and must park 60% of official vehicles.
Monitoring and Enforcement
To ensure compliance, all federal institutions and provincial governments must submit weekly implementation reports through a digital portal developed by the Ministry of Information Technology and Telecommunication Pakistan.
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The Intelligence Bureau Pakistan will conduct audits of fuel cuts and vehicle grounding, submitting weekly reports to the prime minister and the monitoring committee.
A subcommittee led by the Finance Secretary, with provincial finance secretaries as members, has also been formed to design a mechanism for transferring savings generated by these measures into the Prime Minister’s Austerity Fund 2026.
