According to official data, only Rs 76 billion has been spent under the Public Sector Development Programme (PSDP) budget during the first four months (July–October) of FY2025-26 — barely 7.6% of the total Rs 1 trillion allocation. The utilisation is not only lower than last year but also far below the Rs 330 billion already authorised by the Planning Commission for release.
Pakistan’s development spending has hit a worrying slowdown this fiscal year, with the government releasing funds at a painfully slow pace to maintain fiscal discipline under the International Monetary Fund (IMF) programme.
Tight IMF Commitments, Big Surplus with Minimal Development
The slowdown comes at a time when Pakistan reported a rare 1.6% budget surplus in the first quarter, boosted by:
• significant profits from the State Bank of Pakistan
• higher petroleum levy collection
• shutting down hundreds of low-priority and politically motivated development projects
The IMF has insisted that Pakistan divert funds toward strategic, high-impact development projects nearing completion instead of spreading the budget thin across hundreds of schemes.
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However, the resulting financial squeeze has slowed down many projects that directly affect the daily lives of citizens — such as regional infrastructure, education, water supply, and energy initiatives.
Ministries Spend Only a Fraction of Their Allocations
Data from the Ministry of Planning and Development shows that, excluding corporations, about 35 ministries and divisions managed to spend only Rs 54 billion, roughly 8% of their Rs 682 billion allocation.
Corporations — mainly the National Highway Authority (NHA) and the power sector — spent just Rs 22 billion, or 6.9% of their total Rs 318 billion allocation.
The most alarming figure came from the power sector, which used only Rs 1.9 billion, equal to a mere 2% of its Rs 91 billion annual allocation — despite ongoing challenges in transmission, distribution, and system upgrades.
Quarterly Release Mechanism vs. Actual Spending Gap
The Ministry of Finance’s release strategy requires that:
• 15% of development funds be released in Q1
• 20% in Q2
• 25% in Q3
• the remaining 40% in Q4
This aims to ensure that any revenue shortfalls can be adjusted through development cuts later in the year.
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However, despite the Planning Commission authorising Rs 330.4 billion (over 33% of the annual allocation) for ministries, the actual spending on ground projects remained shockingly low.
Only a Handful of Ministries Cross the Rs 1 billion Mark
Out of all ministries, only seven managed to cross the Rs 1 billion spending mark from the development budget in four months.
Key performers included:
• Water Resources Division: Rs 13.56 billion spent (10.5% of its Rs 129 billion allocation)
• National Highway Authority (NHA): Rs 20 billion spent (8.8% of Rs 227 billion)
• Higher Education Commission (HEC): Rs 5.2 billion spent (12.4% of Rs 42 billion)
These ministries generally oversee large, ongoing infrastructure and education projects, which require consistent funding to maintain progress.
A Critical Year Ahead
The slow start has raised concerns regarding Pakistan’s ability to meet development goals for the year. With most ministries spending less than 10 percent of their budget in four months, experts keep on giving warnings that delays may push several important projects into the next fiscal year, increasing overall costs and slowing economic recovery.
As the government attempts to balance IMF conditions with public development needs, Pakistan’s progress on major infrastructure, education, and energy projects now depends on whether PSDP spending picks up pace in the coming months.