The decision, taken by Prime Minister Shehbaz Sharif, comes amidst severe economic challenges faced by the cash-strapped nuclear power, local media reported on Saturday.

The government issued a notification specifying that red carpet usage would be limited solely to protocol purposes at diplomatic events.

Earlier, Sharif and his cabinet voluntarily decided to forego their salaries and perks.

President Asif Ali Zardari has opted not to take a salary to demonstrate solidarity in the face of the country's economic challenges.

Weeks after assuming office, Sharif announced austerity measures to cut government spending.

The measures include a ban on purchase of luxury vehicles, a requirement that ministers travel economy class and pay their own utility bills and the requirement that they do not stay in five-star hotels.

Pakistan has been struggling with rising prices and a faltering economy in recent years.

Sky-high inflation, fuelled by the ever-increasing prices of electricity and petroleum products, is among the challenges the government seeks to resolve.

Pakistan has sought International Monetary Fund (IMF) bailouts several times but the conditions attached to the agency's assistance are always unpopular.

Last year, the IMF pulled Pakistan's economy back from the brink amid fears of default with a short-term $US3-billion ($A4.6-billion) bailout package.

As the program nears its end, the newly-elected government plans to seek another loan of at least $US6 billion from the IMF.

Australian Associated Press