Pakistan ministries spend only 21% of allocated public sector development funds

Pakistan’s disbursements to federal ministries under the Public Sector Development Program (PSDP) have been markedly low, amounting to only 56% of the total allocated funds authorized in the first seven months of the current fiscal year. Actual expenditure has been even lower, at a mere 21% of the total allocation, according to data from the Planning Commission.

For fiscal year 2024-25 (FY25), the government allocated PKR 843.14 billion under the PSDP for federal ministries. However, only PKR 475.34 billion was authorized, with actual spending amounting to just PKR 173.9 billion. The total allocation consisted of PKR 709.94 billion in Pakistani rupees and PKR 133.2 billion in foreign loans.

The National Highway Authority and NTDC/PEPCO corporations saw an allocation of PKR 255.8 billion. However, only PKR 153.5 billion was authorized, and actual expenditure stood at PKR 45.2 billion. Additionally, an allocation of PKR 1 billion was made for project liabilities, but no funds were authorized or spent.

The Ministry of Planning, Development, and Special Initiatives has commenced the formulation process for PSDP 2025-26, along with projections for 2026-27 and 2027-28. Ministries, divisions, and agencies have been instructed to review and prepare their development portfolios, emphasizing high-priority projects that align with the government’s economic strategy under "Uraan Pakistan".

The ministry emphasized that ongoing projects should be scrutinized based on priority to determine their alignment with national development goals. The current throw-forward is PKR 10 trillion, 10 times the current PSDP allocation, assuming no new projects are added.

The size of the PSDP, as a percentage of GDP, has decreased from 1.7% in FY14 to 0.6% in FY25, impacting progress on major national projects. To ensure the completion of ongoing projects in FY26, the government will prioritize those with over 80% expenditure. Ministries are required to allocate funds based on the annual phasing in the approved PC-I.

In a bid to ensure the timely completion of high-priority projects and meet International Monetary Fund (IMF) requirements, the government has decided in principle to phase the ongoing PSDP over three years. This initiative is part of a four-pronged strategy to reduce the current PKR 9 trillion development portfolio under the $7 billion Extended Fund Facility.