FD notifies continuation of strict austerity measures
The federal government extended stringent austerity measures for FY2026-27, including bans on vehicle purchases and new posts, to control public spending and improve fiscal discipline across all entities.
- Continuation of federal government's stringent austerity measures.
- Bans on vehicle purchases, equipment, and new job creation.
- Implementation across all ministries, SOEs, and regulatory bodies.
ISLAMABAD: In a belt-tightening move, the Finance Division on Tuesday notified a continuation of stringent austerity measures for the fiscal year 2026–27, including a ban on the purchase of all types of vehicles, procurement of machinery and equipment, and creation of new posts.
The federal government has extended its austerity regime for fiscal year 2026-27, ordering all ministries, divisions, state-owned enterprises (SOEs), statutory bodies and regulatory authorities to continue enforcing strict expenditure controls as part of efforts to contain public spending and improve fiscal discipline.
According to an official notification, the federal cabinet approved the continuation of austerity measures adopted in 2023 and 2024 during its consideration of the Annual Budget Statement for FY2026-27.
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The Finance Division directed all ministries and divisions to ensure strict implementation of the expenditure curbs across their attached departments, autonomous bodies, corporations, authorities, SOEs and statutory organisations.
The notification stated that the austerity measures previously notified by the Cabinet Division in February 2023 and additional restrictions issued by the Finance Division in September 2024 would remain in force throughout FY2026-27.
For state-owned enterprises, the directives will be treated as binding instructions of the federal government under Section 35 of the State-Owned Enterprises (Governance and Operations) Act, 2023, while statutory bodies will be required to implement them under the relevant provisions of their respective laws.
The cabinet also authorised the Finance Division’s Austerity Committee to grant exemptions from the restrictions on a case-by-case basis where sufficient justification exists.
The Division has asked all ministries and divisions to circulate the instructions to their subordinate organisations and ensure strict compliance with the government’s cost-cutting measures aimed at containing non-essential expenditures amid continued fiscal consolidation efforts.
Copyright Business Recorder, 2026
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