Pakistan expands austerity drive, orders salary cuts at SOEs

The federal government has decided to reduce the salaries of employees working in state-owned enterprises and government-backed autonomous institutions as part of a broader austerity campaign aimed at easing economic pressure and supporting public relief initiatives.

According to an official statement issued after a meeting chaired by Prime Minister Shehbaz Sharif on Saturday, salaries of employees in these organisations will be reduced by 5 to 30 per cent, DAWN News reported on Sunday. The savings generated from the cuts will be redirected toward measures intended to benefit the public.

The decision expands the austerity plan announced earlier in the week after rising global oil prices linked to the ongoing conflict involving the United States, Israel and Iran pushed domestic fuel prices higher.

The meeting, held to review petroleum price trends and the implementation of cost-saving measures, was attended by several senior officials, including Finance Minister Muhammad Aurangzeb, Petroleum Minister Ali Pervaiz Malik, and Information Minister Attaullah Tarar, along with other government representatives.

Officials confirmed that funds saved through the austerity steps would be dedicated exclusively to public relief programmes.

KEY AUSTERITY STEPS

During the session, the government reviewed previously announced cost-cutting actions. Authorities clarified that the newly introduced four-day workweek would not apply to law enforcement agencies or the Federal Board of Revenue, which will continue operating on their regular schedules.

The government also reiterated earlier directives to significantly scale back official spending. These include plans to ground 60 per cent of government vehicles and reduce fuel allocations for official vehicles by half. A third-party audit of these steps is expected within the next two months.

Officials were also briefed on the enforcement of a complete ban on purchasing new government vehicles as well as restrictions on most other public-sector procurement.

Additionally, cabinet members, ministers, advisers and special assistants to the prime minister will set aside their salaries for the next two months as part of the government’s savings effort. A ban on foreign travel by ministers, advisers and senior officials will remain in place, with online meetings and teleconferencing to be used instead.

The government has also directed state-linked corporations not to charge fees for board participation by government representatives, with those funds added to the savings pool. Pakistani embassies worldwide have been instructed to mark Pakistan Day with minimal spending.

FUEL SUPPLY SITUATION REVIEWED

Separately, a government committee responsible for monitoring fuel prices held a virtual meeting led by Finance Minister Aurangzeb to assess the country’s petroleum supply situation.

Officials reported that Pakistan currently maintains sufficient reserves of crude oil and refined petroleum products, and that supply chains are functioning without disruption. The committee was informed about shipments already on the way and additional imports being arranged to strengthen national stocks.

Authorities also examined recent fluctuations in global oil markets driven by geopolitical tensions in the region and discussed potential scenarios that could affect Pakistan’s energy sector and overall economy.

According to the Ministry of Finance, the committee concluded that current stock levels and planned imports should be adequate to meet domestic demand in the coming weeks. Officials stressed the importance of coordination between refineries, oil marketing companies and government agencies to ensure stable fuel availability nationwide.

The meeting also explored options to encourage more efficient fuel consumption and conservation within the public sector to help reduce import costs during periods of international price volatility.