Government extends austerity measures for FY2026-27 across federal entities

ISLAMABAD: The federal government has extended its austerity measures for the 2026-27 fiscal year, continuing expenditure controls introduced in 2023 and 2024 across ministries, divisions, state-owned enterprises (SOEs), statutory bodies and regulatory authorities.

According to a notification issued by the Ministry of Finance, the decision follows the Federal Cabinet's approval during deliberations on the Annual Budget Statement for FY2026-27. 

The government will continue implementing austerity measures previously approved by the cabinet in February 2023 and August 2024.

The notification states that the measures will apply, mutatis mutandis, to all federal government attached departments, SOEs, statutory bodies and regulatory authorities. 

For SOEs, the directives will be treated as binding instructions under Section 35 of the State-Owned Enterprises (Governance and Operations) Act, 2023, while statutory bodies will be governed under the relevant provisions of their respective laws.

The cabinet also authorised the Finance Division's Austerity Committee to grant exemptions from the measures on a case-by-case basis where sufficient justification exists.

The Ministry of Finance has directed all ministries and divisions to circulate the notification among their attached departments, organisations, autonomous bodies, corporations, authorities, SOEs and statutory bodies to ensure strict compliance with the approved expenditure controls.