Pakistan disburses less than half of funds allocated for public sector development

Pakistan has fallen behind in disbursing funds to federal ministries under the Public Sector Development Program (PSDP), with only 34% of the total allocated amount authorized in the first half of the current fiscal year. Actual expenditure was even lower, at just 15% of the total allocation.

According to data from the Planning Commission, the government allocated PKR 843.15 billion under the PSDP for fiscal year 2024-25 (FY25). However, only PKR 286.6 billion was authorized, and of that, only PKR 124.5 billion was spent. The total allocation included PKR 710 billion in Pakistani rupees and PKR 133.2 billion in foreign loans.

For corporations such as the National Highway Authority and NTDC/PEPCO, an allocation of PKR 255.8 billion was made, but only PKR 89.5 billion was authorized, and actual expenditure remained at PKR 23 billion. Additionally, for project liabilities, an allocation of PKR 1.0 billion was made, but nothing was authorized or spent.

In September, the International Monetary Fund (IMF) called on Pakistan to reassess its PSDP for the current fiscal year and to stop funding provincial projects with federal resources. The IMF's concern over federal funding for provincial projects is tied to the 37-month Extended Fund Facility (EFF) agreement.

In response, the government has decided not to release funds for non-priority projects, despite their allocations in the budget. Priority is being given to core, foreign-funded, and near-completion projects, while less important initiatives may face delays or cancellations.

An analyst noted that the challenges posed by scarce resources and the high demand for development projects need to be addressed during the financial year. Originally set at PKR 1.4 trillion, the PSDP budget was revised down to PKR 1.1 trillion due to fiscal constraints.

Priority is being given to core, foreign-funded, and near-completion projects, while less important initiatives may face delays or cancellations.