In a capital city where the poor live in mud huts on the outskirts of town as the country’s governing elite enjoy terraced estates a few miles away, the new prime minister has been trying to decide what to do with his palace.

Amid a debate reminiscent of political combat over perks for elected officials in the United States, third-time premier Nawaz Sharif announced last week that he would not stay in the prime minister’s residence, an expansive ranch-style mansion built two decades ago, where he had lived while serving his second term, from 1997 to 1999. Instead, Sharif suggested that he would live in a smaller, though still pristine, house often used by visiting officials.

In the weeks before Sharif assumed the post of prime minister Wednesday, he struggled over where he would live as he confronted economic challenges arising from chronic energy shortages, high inflation and record-low foreign investment. He said his rejection of the official residence, coupled with plans to reduce the size of his cabinet, signaled a new period of austerity in a country whose leaders have long battled charges of extravagance, corruption and a disconnect from ordinary residents.

Public approval was swift.

“A life of austerity is far better than a life of dependency and insolvency,” one reader wrote to the News International, an English-language newspaper in Pakistan. “Let’s do away with luxuries, opulence which will get us nowhere. . . . True prosperity follows austerity.”

Pakistan, founded in 1947, is a relatively new country and has an even newer capital. The seat of government was shifted to Islamabad from Karachi in the 1960s, and Islamabad lacks the historical treasures found in many other national capitals.

But though Pakistan’s earliest leaders were fairly modest, their successors slowly built up Islamabad’s federal district, including an imposing Supreme Court building, a presidential office compound that resembles a larger version of Washington’s Kennedy Center and a suite of office space for the prime minister that is nearly as imposing as rival India’s Taj Mahal.

The prime minister’s house is nestled a short distance away, where the lush Margalla Hills that overlook the city begin their rise toward the Himalayan mountains. According to past visitors and government officials, the one-story house is defined by its gardens rather than its architecture — more resort than castle.

The L-shaped estate includes a winding driveway, well-furnished waiting rooms for guests, a helipad, a basement auditorium and several staff houses, and has a $3.6 million maintenance budget, according to Pakistan’s Capital Development Authority.

Some officials and journalists who have visited the property say it pales in comparison with the living quarters of many heads of states. But for Pakistanis already skeptical of their leaders, the house has at times served as a symbol of a growing wealth disparity.

“It’s garish for a country as ours,” said Sakib Sherani, who served as one of Pakistan’s chief economic advisers from 2009 to 2010. “If Islamabad is known for being 20 miles outside the rest of Pakistan,” he said, repeating a common joke about the capital’s perceived disconnect, “then the prime minister’s house is five miles outside of Islamabad.”

A symbol of profligacy

According to the United Nations, about half of the country lives in poverty, and the average worker makes the equivalent of about $255 a month. But large pockets of affluence — and the garden parties and designer clothes that accompany it — can be found in Islamabad and the larger cities of Lahore and Karachi.

Most of the country’s prime ministers, including Sharif, a textile magnate who first served as prime minister from 1990 to 1993, and the late Benazir Bhutto, who held the post twice, have been part of that wealthy class.

And the prime minister’s house played a small role in both politicians’ fall from power.

In her second term, from 1993 to 1996, Bhutto came under heavy criticism after her husband, Asif Ali Zardari — now the country’s outgoing president — spent millions of dollars and leveled acres of trees near the residence to install a polo field. The controversy fed into broader corruption allegations against the family, which contributed to Bhutto’s 1996 ousting.

When Sharif succeeded Bhutto, he, too, battled critics over his use of the house. Abida Hussain, who served as Pakistan’s ambassador to the United States from 1991 to 1993, recalled that Sharif relied on top designers to furnish the residence.

“He was not like India, where maintaining a modest lifestyle for top leaders flowed from the Gandhi era,” said Hussain, noting that Sharif was born into wealth and raised in lavish mansions. “We veered more and more toward the Arabs, the Gulf Arabs, whose leaders were extremely elaborate. We looked away from the Indian model of simplicity.”

Sharif was ousted by then-army chief Pervez Musharraf in a coup in 1999, accused of corruption and then exiled to Saudi Arabia until 2007.

As he sought to return to power in national elections this spring, Sharif faced the energetic campaign of former cricket star Imran Khan. Although Khan also is wealthy, he rallied younger voters with a populist message that railed against government excess, and he pledged not to reside in the prime minister’s house.

Sharif’s memories

Several observers said Sharif’s subsequent decision not to return to the official residence reflected concern that Khan, whose Movement for Justice party finished a distant second in the May 11 elections, could again pose a threat if Sharif did not scale back his lifestyle or move swiftly to address the country’s economic woes.

Others suspect that Sharif had more personal reasons. When he was ousted by Musharraf, the army surrounded the residence, dragged Sharif out and arrested him in the driveway.

“He has nightmarish memories of that house,” said Muhammad Akram Shaheedi, a former federal information officer. “Those memories haunted him. . . . He was humiliated to the core.”

Whatever the motives, within days of Sharif’s announcement, Pakistani security officials were expressing concern through the news media over his plans to reside in the more modest Punjab House, built for officials from the province of the same name.

Not only is it more accessible to the public — and vulnerable to rocket attacks from the surrounding hills — it also does not contain the “hot phones” that the prime minister needs to quickly communicate with military chiefs, they said.

So after Sharif was sworn in Wednesday, he and his family moved into the prime minister’s house, where, presumably, they will remain.