The federal government has extended austerity measures for the 2026-27 fiscal year to reduce public spending and manage economic challenges.
The Ministry of Finance issued a formal notification after federal cabinet approval. Moreover, the directives apply to ministries, departments, autonomous bodies, regulatory authorities, state-owned enterprises, and statutory organizations.
Government Orders Continued Spending Cuts
Prime Minister Shehbaz Sharif announced the austerity drive in March following the US-Israel war against Iran. The government said the measures aim to address economic pressures and provide relief to the public.
According to the notification, all government institutions must comply with the policy. Furthermore, the Ministry of Finance described the directives as a mandatory constitutional requirement.
The Austerity Committee may grant exemptions in exceptional cases. However, institutions must provide compelling reasons before receiving approval.
The Finance Ministry also instructed all ministries and divisions to ensure full implementation of the policy throughout the 2026-27 financial year.
Supreme Court Ended Separate Policy
Meanwhile, the Supreme Court ended its own austerity measures in June. Chief Justice of Pakistan Justice Yahya Afridi ordered the policy’s withdrawal from June 15, 2026.
The court’s measures included a four-day workweek, reduced fuel allocations for official vehicles, and restricted judicial protocols. Additionally, video-link hearings continued to support access to justice, while Friday hearings remained limited to urgent cases.
According to an official notification, the Supreme Court withdrew its March 10 austerity directive. Consequently, all administrative and operational matters resumed under normal procedures from June 15.
The federal government’s austerity policy, however, will remain in force throughout the 2026-27 fiscal year.
