• Civil administration costs jump 13pc to Rs161.2bn in July-Sept
• Pension bill soars 125pc over five years; subsidy payments rise six times to Rs120bn
• Surge persists despite ‘aggressive rightsizing’, which cuts over 200,000 jobs

ISLAMABAD: The government’s expenditure on civil administration and pension payouts has continually climbed over the last five years, with the first quarter of the current fiscal year seeing a double-digit increase despite a strict official austerity policy and an aggressive downsizing exercise.

Fiscal data released by the Ministry of Finance indicates a 13pc increase in ‘Running of the Civil Government’ expenditure in the first quarter, which runs from July to September. The costs rose to Rs161.2bn in the current fiscal year, compared to Rs142.5bn during the same period last year.

This rise in expenses comes as the government claims to be tightening its belt through significant staffing and structural reforms.

The increase is notable as the government abolished more than 150,000 posts last year and has been “rightsizing” various ministries, divisions and their subordinate departments through mergers and closures.

Additionally, Finance Minister Muhammad Aurangzeb anno­unced about a week ago that the government had abolished an additional 54,000 vacant posts across various departments, resulting in an annual saving of more than Rs56bn to the exchequer.

He added that the process of merging and restructuring several ministries and divisions was also underway as part of fiscal reforms.

The trend of rising costs is not new. Civil government expenses in the first quarter of last year saw an 8pc increase compared to the same period of FY24, which itself had posted a 29pc surge over FY23.

The data showed that the running of civil government expenses has jumped by almost 80pc since the first quarter of FY22 when the expenditure amounted to Rs89.5bn. The full-year bill for running the civil government had crossed Rs892bn.

Similarly, pension expenditures continue to climb. In the first quarter of the current year, pension payments amounted to Rs249.5bn, a 10pc increase over the Rs223bn spent in the comparable period of FY25.

A year earlier, pension payments had witnessed a 9pc increase. Over the past five years, pension expenditure has surged by almost 125pc, up from the Rs111bn reported for the first quarter of FY22. The total pension bill at the conclusion of the last fiscal year reached Rs911bn.

In contrast to the rigid and monthly due expenses of pensions and civil administration, the official data showed large var­iations in subsidy payments, which the government can postpone. These payments saw a six-time surge in the first quarter of the current year, reaching Rs120bn compared to Rs20bn last year.

The government had disbursed only Rs2.5bn for subsidies in the first quarter of FY24, while payments in the preceding two years were Rs93bn and Rs74bn, respectively. The subsidy bill last year reached Rs1.298 trillion.

On paper, the government has adhered to an austerity policy across all sectors since 2021, driven by stringent fiscal oversight mandated by successive IMF programmes.

In June, the government ann­ounced the continuation of austerity measures for FY26, which included a complete ban on the purchase of all types of vehicles, the procurement of machinery and equipment, and the creation of new posts throughout the federal government.

However, various ministries, divisions and entities kept on fi­n­d­ing ways to bypass such banks on one pretext or another.

Published in Dawn, December 8th, 2025