Cabinet Scraps Board Fee Limit for Bureaucrats, Citing Non-Compliance
ISLAMABAD, July 2025 — The federal cabinet has withdrawn its 2024 decision to cap board fees of top bureaucrats at Rs1 million per year, following widespread non-compliance among civil servants. The decision, initially championed by Prime Minister Shehbaz Sharif and Deputy Prime Minister Ishaq Dar, was aimed at reinforcing financial discipline across state-owned enterprises (SOEs) and regulatory boards.
According to a fresh notification issued by the Finance Division, the cap — enforced in July 2024 — stands withdrawn ab-initio, meaning it’s now considered as never having been enforced.
Why Was the Decision Withdrawn?
Despite the original order mandating bureaucrats to surrender excess board fees to the national exchequer, most failed to comply. High-paying boards like Pak-Arab Refinery Limited (PARCO) and PTCL offer up to Rs1.4 million per meeting, with fees at other boards ranging from Rs100,000 to Rs500,000.
In 2023, then-finance minister Ishaq Dar had proposed a Rs600,000 cap on board fees, which was later raised to Rs1 million by the cabinet in 2024. However, due to lack of enforcement and growing pressure, the cap was officially rescinded on June 22, 2025.
Govt Renews Austerity Measures for FY2025-26
In contrast to the rollback on board fee reforms, the federal government has reimposed austerity measures to control public expenditures for the new fiscal year.
The new austerity notification applies to:
-
All federal ministries
-
Attached departments
-
Statutory bodies (including regulators)
-
State-owned enterprises (SOEs)
Key Austerity Measures:
-
Ban on new vehicle purchases, except for essential operations (ambulances, fire engines, education, solid waste vehicles).
-
Restriction on machinery procurement, except for hospitals, labs, schools, agriculture, and mining.
-
Freeze on creation of new posts, with all vacant positions for over 3 years to be abolished.
-
Ban on foreign medical treatment and non-essential foreign trips.
-
No purchase of new equipment or machinery, except under Public Sector Development Programme (PSDP) projects.
Despite these measures, FBR officials were recently seen using new vehicles bearing official logos for private use, raising concerns about irregular enforcement.
Salary and Pension Increases Announced
As part of the FY2025-26 federal budget, the Finance Division has also notified:
-
10% salary increase for:
-
Armed Forces
-
Civil Armed Forces
-
All civil federal employees
-
Civilians paid from defence allocations
-
Contract employees under basic pay scale terms
-
-
7% increase in net pensions for all federal government retirees, including:
-
Pensioners under the Pension-cum-Gratuity Scheme, 1954
-
Beneficiaries of Liberalised Pension Rules, 1977
-
Conclusion
While the withdrawal of the board fee cap may trigger public criticism over fiscal governance, the government’s renewed austerity campaign and budgeted relief for employees and pensioners aim to balance reform fatigue with essential economic discipline. The contrasting signals — one of rollback and the other of restraint — highlight the complex balancing act the Shehbaz-led administration faces amid economic reform and political pressure.
