Austerity Measures Extended for Fiscal Year 2025-26

ISLAMABAD: In an effort to manage finances more effectively, the Finance Division has announced the continuation of strict austerity measures into the fiscal year 2025-26. These measures include a freeze on the acquisition of all types of vehicles, the purchase of new machinery and equipment, and the establishment of any new government positions.

The Federal Cabinet sanctioned these measures on June 10 with the goal of reducing non-essential spending across various federal departments, state-owned enterprises, and regulatory bodies.

According to the notification released by the Finance Division, the federal cabinet has endorsed the ongoing implementation of austerity measures for the fiscal year 2025-26, consistent with prior notifications issued by:

  • The Finance Division in fiscal year 2024-25, dated 04-09-2024, following a cabinet decision on 27-08-2024.
  • The Cabinet Division, O.M. No. 7-1/2023-Min-I dated 28-02-2023, pursuant to a cabinet decision on 22-02-2023.
  • The Cabinet Division, O.M. No. 9-148/2002-Min-II dated 28-02-2023, also following a cabinet decision on 22-02-2023.

The notification also specified that these austerity measures will be uniformly applicable during the fiscal year 2025-26 to all federal government attached departments, state-owned enterprises (SOEs), and statutory bodies, including regulatory authorities, as:

  • Approved by the cabinet on 22-02-2023 and notified by the Cabinet Division via O.M. No. 9-148/2002-Min-II dated 28-02-2023.
  • Approved by the cabinet on 27-08-2024 and notified by the Finance Division on 04-09-2024.

For SOEs, these measures are considered a formal directive from the federal government, as per Section 35 of the State-Owned Enterprises (Governance & Operations) Act, 2023, and relevant sections of their respective organic laws for statutory bodies.

The Finance Division’s notification on September 4, 2024, outlined that, following the cabinet’s decision for case No. 232/28/2024 dated 27-8-2024, the following cost-saving measures will remain in effect until further notice:

  1. A complete ban will be enforced on the following expenditures within the current budget:
    • The purchase of all types of vehicles, excluding operational vehicles like ambulances, medically equipped vehicles, firefighting vehicles, buses and vans for educational institutions, solid waste vehicles, and motorcycles.
    • The procurement of machinery/equipment, except for essential items needed by hospitals, laboratories, agriculture, mining operations, and schools.
    • The creation of new positions, including contingent paid/temporary posts.
    • The continuation of contingent paid/temporary posts beyond a one-year term.
    • Medical treatment abroad funded by the government.
    • All non-essential international travel involving government of Pakistan funding.
  2. The austerity measures previously communicated by the Cabinet Division via O.M. Nos. 7-1/2023-Min-I and No. 9-148/2002-Min-II, both dated 28-2-2023, will continue to be enforced unless specifically altered or revoked by the Federal Cabinet.
  3. All positions that have remained vacant for the past three years will be eliminated. The purchase of durable goods and the creation of posts under PSDP-funded projects will be exempt from this ban.