Pakistan to cut government expenses by 15% in austerity drive

The stringent measures are part of the requirements the IMF has asked Pakistan to fulfill before finalising a loan deal

Pakistan's Prime Minister Shehbaz Sharif speaks during the COP27 climate summit in Egypt's Red Sea resort of Sharm el-Sheikh, Egypt November 8, 2022. REUTERS/Thaier Al-Sudani

Pakistan's government will cut back allowances and travel expenses of ministers and advisers as part of an austerity drive that will save it 200 billion rupees ($766 million) a year, Prime Minister Shehbaz Sharif said on Wednesday.

The belt tightening comes as Islamabad - which is facing a balance of payment crisis - thrashes out a deal with the International Monetary Fund (IMF) to secure funds worth $1 billion which have been pending since late last year over policy issues.

Sharif said all federal ministries and government offices have been directed to reduce expenditure by 15% and that he had asked his ministers and advisers to forgo salaries, allowances, luxury cars, foreign trips and business class travel.

Ministers agreed to the measures voluntarily, he said.

"These austerity measures will save us 200 billion rupee annually," Sharif told a news conference in Islamabad.

The South Asian nation hopes to secure funds from the IMF soon, Sharif said, adding the stringent measures were part of the requirements the lender had asked Pakistan to fulfil before finalising a deal.

Talks between Pakistan and the IMF are due to conclude this week, officials say.

Before the talks the IMF had asked Pakistan to take a host of prior actions, which included withdrawal of subsidies, hiking energy tariffs, and raising extra revenues.