Austerity delusion
ON March 20, 2026, Pakistan’s prime minister delivered a somewhat unwarranted and empty address to the nation — merely to announce that he had declined one among a dozen or so summaries placed before him each day. The announcement of not consenting to an additional hike in oil prices at the time, came in the wake of previously announced, lukewarm austerity measures. While burdening the poor, such ‘plasters on a bullet wound’ measures provide neither long-term financial reforms nor alter the fundamental societal inequality. The outrageous purchases of a Rs11 billion Gulfstream jet, a Rs90 million luxury vehicle for the Senate chairman and seven luxury cars for judges not simply betray but completely shatter the government’s much-trumpeted commitment to austerity.
On the same day, March 20, 2026, Spain’s Prime Minister Pedro Sánchez also unveiled a set of austerity measures. Called a “social shield”, he approved a €5bn economic support package of 80 specific reforms focused on tax relief and direct aid to prevent “energy poverty” amongst the more vulnerable sectors. These measures include up to 57 per cent discounts on electricity bills, freezing rent increases across Spain, “free or nearly free” rail and bus passes to encourage citizens to leave their personal cars at home and a €40m credit line for transition to e-vehicles.
In sharp contrast to the Pakistani approach, Spain slashed the VAT on petrol, diesel, electricity and gas from 21pc to 10pc for all households and small businesses. The sterling example of Spain using just 649 pooled government vehicles offers a telling glimpse into how public resources, if not skewed in favour of the privileged, can be diverted for the good of ordinary citizens. In stark contrast, Pakistan has handed out over 110,000 government vehicles to already well-compensated public officials.
Austerity efforts won’t succeed unless inequality is reduced.
Pakistanis increasingly see the much-trumpeted austerity measures as a smokescreen, designed to divert attention, while new pipelines are laid to siphon yet more resources for those already basking in privilege. Often, to placate the IMF, the same set of austerity measures has been repeatedly recycled over the past several years — only to be cast aside with remarkable haste. Temporary gestures, such as donating two days’ salary or reducing the already unjustified free fuel quotas for two months or cabinet members foregoing their salaries for six months are both deceptive and cosmetic. The following proposals outline what Pakistan could undertake if it is genuinely committed to austerity to advance equity and protect all citizens’ well-being.
Begin by reducing the size of our hugely bloated and inefficient government. Shut down the 25 state-owned enterprises that collectively incur losses of Rs832.8bn each year and close all non-value adding departments, councils and commissions. A central car-pool policy by withdrawing all federal and provincial government cars and eliminating all free fuel quotas could save up to Rs140bn per year. There ought to be no embarrassment in learning from Rwanda, whose zero-fleet policy provided an immediate multimillion-dollar cash injection and eliminated millions in annual maintenance and drivers’ salaries. The recent increase in the petroleum levy on high-octane fuel is a welcome step. This must however be followed by placing an immediate ban on import of all petrol-powered vehicles above 1300cc and giving massive subsidies to promote local production and purchase of e-vehicles and e-bikes.
A complete ban on the purchase and use of air conditioners in government offices will not just provide first-hand experience to of the realities faced by ordinary citizens but also save over Rs110bn per year. Our criminal protection of IPPs, many owned by powerful influentials ought to cease forthwith. Instead, we need to incentivise and fast-track the solarisation of all government and private buildings. Enforce a strict 7pm nationwide closure for all commercial markets and shopping malls. Finally, to foster a truly equitable and progressive society, Pakistan must begin taxing inheritance, wealth and agricultural holdings.
No austerity effort will ever ring true unless Pakistan undertakes bold and decisive reforms to reduce its stark inequality. The maximum salary of any public official, including the chief justice of the Supreme Court, should be capped at Rs500,000, while no official pension must exceed Rs200,000 per month for the next five years. Austerity must target those who are already excessively privileged, rather than the 76m workers who are not even included in the government’s pension coverage (EOBI) and are paid less than half the government’s own specified minimum wage.
The writer is an industrial engineer and a volunteer social activist.
Published in Dawn, April 6th, 2026
