Govt Announces Pay Cuts for Officials, Other Saving Measures

The Cabinet Division of Pakistan has issued a formal notification announcing additional austerity and fuel-saving measures to reduce government expenditure.

Under the new measures, senior management in state-owned enterprises, autonomous and statutory bodies, and regulatory authorities will face a two-month temporary salary cut. The reductions will apply to the gross salaries of chief executive officers, executive directors, directors and senior managers.

According to the notification issued on March 14, the measures were approved by Prime Minister Shehbaz Sharif following recommendations from the Committee for Monitoring and Implementation of Fuel Conservation and Additional Austerity Measures.

According to the notification, employees earning between Rs. 300,000 and Rs. 1 million will face a 5% salary cut, while those earning Rs. 1 million to Rs. 2 million will see a 15% reduction. Officials with salaries between Rs. 2 million and Rs. 3 million will face a 25% cut, while those earning above Rs. 3 million will face a 30% reduction for two months.

All deducted amounts will be deposited into the Prime Minister’s Austerity Fund 2026.

The government has also ordered that 100% of board fees paid to government nominees serving on boards of state-owned enterprises, statutory bodies and private sector companies be deposited in the austerity fund for the next two months.

As part of diplomatic spending cuts, the Ministry of Foreign Affairs Pakistan has been directed to hold simple flag-hoisting ceremonies on March 23 instead of receptions at overseas missions. Foreign missions will also face a 20% reduction in their non-ERE budgets and a two-day salary deduction for staff posted abroad. At the same time, obligations such as rent, education fees, and medical expenses will continue to be paid.

The government has imposed a complete ban on foreign visits and official overseas travel for two months, including obligatory events. In cases where Pakistan’s participation is required, the country’s ambassadors or high commissioners stationed abroad will represent the government. 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 the previously announced work-from-home policy and four-day work week. Similarly, official vehicles used for Customs enforcement operations and Inland Revenue Enforcement Network (IREN) operations will not be subject to the general restrictions on fuel usage and vehicle grounding.

However, the FBR has been directed to meet overall fuel reduction targets through adjustments in other wings.

Law enforcement agencies and the armed forces will also be exempt from work-from-home arrangements and the four-day workweek due to security requirements. However, departments not actively involved in ground-level security operations will face a 50% reduction in fuel allocation and a requirement to park 60% of official vehicles.

The notification also calls for the rationalisation of security vehicles accompanying vulnerable dignitaries. At the same time, principal accounting officers of ministries and divisions have been instructed to ensure that official vehicles are used strictly for official purposes.

To monitor compliance, all federal institutions and provincial governments have been directed to 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 allocation cuts and the grounding of official vehicles, submitting weekly reports to the prime minister and the monitoring committee.

Additionally, the IT ministry has been instructed to provide APN devices for the e-Office system within four days, and ministries and divisions have been asked to submit their requirements immediately.

A subcommittee headed by the Finance Secretary of Pakistan and comprising provincial finance secretaries has also been formed to devise 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 the next meeting.