Despite government efforts to reduce spending by downsizing ministries and abolishing thousands of vacant positions, Pakistan’s expenditure on civil administration and pension payments continues to grow at a fast pace.
Latest data from the Ministry of Finance shows that the first quarter of FY26 recorded another sharp increase, highlighting persistent financial pressures.
Between July and September, spending on the “Running of Civil Government” reached Rs. 161.2 billion, up 13% from Rs. 142.5 billion in the same period last year.
Over the past five years, costs have risen dramatically, with first-quarter expenditure nearly 80% higher than Rs. 89.5 billion recorded in FY22.
Last year, the total annual cost for running civil administration exceeded Rs. 892 billion, despite the government eliminating over 150,000 posts and planning the removal of another 54,000 vacant positions, expected to save Rs. 56 billion annually.
Pension payments have also surged, reaching Rs. 249.5 billion in the first quarter of FY26—a 10% increase from Rs. 223 billion last year. Over five years, the pension bill has more than doubled, climbing almost 125% from Rs. 111 billion in Q1 FY22 to a full-year expenditure of Rs. 911 billion in FY25.
Subsidy payments, which the government can adjust more flexibly, showed wide fluctuations. In Q1 FY26, subsidies jumped to Rs. 120 billion from just Rs. 20 billion in the same period last year, while the annual subsidy bill in FY25 stood at Rs. 1.298 trillion.
These trends indicate that while the government has focused on structural reforms and workforce reductions, rising costs in civil administration, pensions and subsidies continue to put significant pressure on Pakistan’s fiscal health.