ISLAMABAD: The federal government has decided to continue its austerity policy during the current fiscal year, maintaining restrictions on new government hiring and the purchase of vehicles, machinery and equipment, official sources said.

According to sources, the federal cabinet has approved an extension of the cost-cutting measures aimed at controlling public expenditure and reducing non-essential government spending. Following the approval, the Cabinet Division reportedly sent a letter to the Ministry of Finance for implementation.

Under the extended austerity measures, all government positions that have remained vacant for the past three years will be abolished. The creation of new posts will also remain restricted during the fiscal year.

The government has further maintained a ban on the purchase of all types of official vehicles. Restrictions on the procurement of machinery, equipment and other durable goods will also continue, according to officials familiar with the decision.

The measures are broadly consistent with previously issued federal austerity guidelines, which required the abolition of posts vacant for three years and imposed restrictions on the purchase of vehicles and durable goods.

Official treatment abroad at government expense will remain prohibited, while unnecessary foreign visits by public officials will also be restricted. Earlier federal directives had imposed strict limitations on official foreign travel and government vehicle purchases as part of efforts to curb recurrent expenditure.

The government’s recurrent budget release strategy for fiscal year 2026–27 also directs federal departments to fully comply with austerity measures issued from time to time.

Sources said the Ministry of Finance is expected to issue a formal notification outlining the extended measures shortly.

The policy is intended to limit non-development expenditure and improve financial discipline across federal ministries, divisions and attached departments. Pakistan’s Economic Survey has previously identified restrictions on vehicle purchases and other non-essential spending as part of the government’s strategy to minimise operational expenditure.

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