KP Cracks Down On Government Spending With Austerity Measures

The Khyber Pakhtunkhwa Finance Department has issued new Austerity Measures and Budget Execution Guidelines for FY2026-27 after receiving approval from the Provincial Cabinet during its meeting on June 19, 2026.

Under the new measures, the provincial government has prohibited the creation of new posts, the purchase of non-essential official vehicles, participation in overseas workshops and training programmes funded by the provincial government, official events at five-star hotels, and overseas medical treatment financed through public funds.

However, the Chief Minister of Khyber Pakhtunkhwa may consider exceptions in cases involving public interest or unavoidable circumstances.

The Finance Department has instructed all Principal Accounting Officers to conduct regular Departmental Accounts Committee meetings to strengthen internal audit and financial oversight. Departments have also been directed to ensure expenditures remain within released funds and to avoid creating financial liabilities before the required funds are available.

To improve revenue collection, the guidelines assign the Provincial Revenue Review Committee, chaired by the Advisor on Finance, the responsibility of continuously monitoring revenue-generating departments, recommending reforms, establishing performance benchmarks, and proposing legal and administrative improvements.

The department has also made prior approval from the Finance Department mandatory for appointments on daily wages, contingent-paid staff, leave vacancies, and recruitment against vacant posts. Appointments against dying cadre positions have been completely prohibited.

Maintenance and repair projects must comply with all applicable rules, receive approval from the relevant authorities, and obtain administrative sanction before work begins. In addition, all Works Departments must maintain complete digital records of such projects through a designated e-portal and submit quarterly internal audit reports to the Finance Department.

The guidelines further state that funds allocated for advertisements must only be used for their approved purpose. The Information Department has been tasked with maintaining records of all government advertisements and publications while conducting reconciliation exercises at least twice each year.

Autonomous and semi-autonomous bodies, Medical Teaching Institutions, and other public sector organisations have also been instructed to implement the austerity measures after obtaining approval from their respective governing bodies.

The Finance Department has further directed all government institutions to closely monitor the use of official vehicles, fuel consumption, and maintenance expenses, minimise unnecessary official travel, maximise virtual meetings, and reduce avoidable expenditures, including hospitality costs during official meetings.

The new guidelines are intended to strengthen fiscal discipline, eliminate unnecessary spending, improve revenue generation, and promote transparent and efficient use of public resources. All administrative departments, autonomous and semi-autonomous organisations, divisional commissioners, deputy commissioners, and attached departments have been instructed to implement the directives in both letter and spirit.