Austerity plan: Finance Division bans vehicle purchases, new posts

ISLAMABAD: In a belt-tightening move, the Finance Division notified austerity measures, including ban on purchase of all types of vehicles, procurement of machinery/equipment and creation of new posts for controlling expenditures of the federal government during fiscal year 2025-26.

The notification issued by the division stated that the federal cabinet in its decision dated 10.06.2025 has approved continuation of following austerity measures for fiscal year 2025-26 as already notified by; (i) finance division during fiscal year 2024-25, dated 04.09.2024 in pursuance of Cabinet decision dated 27.08.2024; (ii) Cabinet Division vide OM No 7-1/2023-Min-I dated 28.02.2023 in pursuance of Cabinet decision dated 22.02.2023; and (iii) Cabinet Division vide OM No 9-148/2002-Min-II dated 28.02.2023 in pursuance of Cabinet decision dated 22.02.2023.

Budget 2025–26: Austerity or stimulus?

The notification stated that the Cabinet further approved that:(1) the following austerity measures shall also be applicable mutatis mutandis during fiscal year 2025-26 in the case of all federal government attached departments, state-owned enterprises and statutory bodies etc including regulatory authorities: (a) approved by the Cabinet on 22.02.2023 and notified by the Cabinet Division vide OM No 9-148/2002-Min-II dated 28.02.2023; and (b) approved by the Cabinet on 27.08.2024 and notified by the Finance Division dated 04.09.2024.

In the case of state owned enterprises, these austerity measures shall be considered a direction of federal government under Section 35 of the State-Owned Enterprises (Governance & Operations) Act, 2023 and under the relevant sections of their respective organic laws in the case of statutory bodies.

The Finance Division’s notification issued on September 4, 2024 stated that in pursuance of the Cabinet’s decision for case No 232/28/2024 dated 27.8.2024, the following austerity measures are notified till further orders:-

(i) There shall be a complete ban on the following expenditures with respect to the current budget. (a) Purchase of all types of vehicles with the exception of operational vehicles such as ambulances and other medically equipped vehicles, fire fighting vehicles, buses and vans for educational institutions, solid waste vehicles and motorbikes; (b) Procurement of machinery/equipments with the exception of those required for hospitals/laboratories/agriculture/mining/schools; (c) creation of new posts including contingent paid/temporary posts; (d) Continuation of contingent paid/temporary posts beyond one year; (e) Treatment abroad at government expense; and (f) All non-obligatory visits abroad where government of Pakistan funding is involved.

(ii) The Austerity Measures notified by the Cabinet Division vide OM Nos 7-1/2023- Min-I and No 9-148/2002-Min-II dated 28.2.2023 will remain applicable unless modified or withdrawn by the Federal Cabinet.

(iii) All posts lying vacant for last three years shall be abolished. Purchase of durables and creation of posts under PSDP funded projects shall be exempted from the application of this ban.

Copyright Business Recorder, 2025