Pakistan minister warns of development crisis as PSDP budget slashed

Pakistan’s Minister for Planning, Development, and Special Initiatives Ahsan Iqbal on Thursday sounded the alarm over a steep cut in the federal development budget, warning that PKR 921 billion allocation for the Public Sector Development Program (PSDP) for the current fiscal year is grossly inadequate and threatens to derail key infrastructure, energy, and social sector projects.

In a press conference held in Islamabad, Iqbal stated that a minimum of PKR 1,600 billion is required for federal development projects, but so far, only PKR 921 billion has been sanctioned by the Ministry of Finance.

This figure is PKR 179 billion less than the current year's PSDP allocation of PKR 1,100 billion, and far below the Ministry of Planning, Development, and Special Initiatives' total development estimate of PKR 2,900 billion, which includes both ongoing and new projects.

The minister highlighted that such a drastic cut could hamper development efforts, especially considering the government's aim to secure PKR 700 billion from international development partners — a target that may become unreachable if domestic funding remains insufficient.

Iqbal also announced a strategic shift in development planning, stating that provincial development projects will be minimized as 60% of federal revenues are already transferred to provinces. He emphasized that provinces should prepare and fund their own development initiatives.

Addressing infrastructure and energy projects, Iqbal raised serious concerns about financial irregularities. The Dasu Hydropower Project has ballooned from PKR 500 billion to PKR 1,700 billion, with contracts awarded in foreign currency. The Diamer-Bhasha Dam cost has increased from PKR 480 billion to PKR 1,500 billion, he pointed out.

The government awaits an international audit report on the Neelum-Jhelum Project, after which action will be taken.

Iqbal revealed that the Annual Plan Coordination Committee (APCC) and National Economic Council (NEC) meetings are scheduled for the third and fourth weeks of May, during which key development decisions will be finalized.

To sustain and expand the development agenda, Iqbal emphasized the need to raise the tax-to-GDP ratio to 16-18%, clamping down on tax evasion, and ensuring that every citizen contributes taxes on their income.

He announced the establishment of a scrutiny system within the Ministry of Planning, Development, and Special Initiatives and the launch of a public hotline for citizens to report corruption in development projects.