Pakistan utilized only 56% of its federal development budget during the first 10 months of the current fiscal year, reflecting mounting fiscal pressures and weak revenue collection as the government balances economic reforms with IMF-backed fiscal discipline.
Expenditure under the federal Public Sector Development Programme stood at PKR 469.85 billion from July 2025 to April 2026, against an authorized allocation of PKR 833.34 billion for the period, according to official data. The total PSDP allocation for the full fiscal year amounts to PKR 837.16 billion.
The data showed uneven spending across ministries and divisions, with several key sectors recording low utilization rates.
The Communications Division, excluding the National Highway Authority, utilized only PKR 16.22 million out of its authorized PKR 79.47 million allocation, reflecting nearly 20% utilization. The Interior Division spent PKR 5.75 billion against an allocation of PKR 11.52 billion, representing 50% utilization.
The Water Resources Division, the largest recipient of development funding, spent PKR66.91 billion out of its authorized PKR106.64 billion allocation during the July-April period.
The Higher Education Commission utilized PKR24.15 billion against an authorized PKR34.91 billion allocation, while the Religious Affairs and Interfaith Harmony Division reported no expenditure despite receiving an allocation of PKR400.38 million.
Among state corporations, the National Highway Authority spent PKR84.41 billion out of its authorized PKR184.87 billion allocation. The Power Division, covering NTDC- and PEPCO-related projects, utilized PKR52.77 billion against PKR75.14 billion authorized.
Overall, federal ministries spent PKR 332.67 billion out of the PKR 573.33 billion authorized for the first 10 months of the fiscal year. The expenditure figures cover spending through the end of April and exclude the final two months of FY26.
The Ministry of Planning, Development and Special Initiatives, which oversees PSDP implementation, did not immediately comment on the spending data.
Economists attributed the slower-than-targeted utilization to limited fiscal space, weak revenue performance and ongoing expenditure controls linked to macroeconomic stabilization efforts.
“Development spending is being squeezed by limited fiscal space and weaker revenue performance,” an analyst said, adding that the improvement from the previous year remained modest.
The slower pace of development spending comes as Pakistan continues to navigate fiscal reforms and external financing requirements under programs supported by the International Monetary Fund.
Separately, the Ministry of Finance has proposed an indicative ceiling of PKR 1.126 trillion for the FY27 PSDP, significantly lower than the PKR 2.9 trillion sought by the Ministry of Planning for ongoing and proposed development projects.
Planning Minister Ahsan Iqbal confirmed that the Finance Ministry had formally communicated the proposed ceiling to the Planning Ministry.
Officials said ministries, divisions and departments collectively requested nearly PKR 4 trillion in development funding for FY27, but the Finance Ministry cited fiscal constraints as the main reason for limiting allocations.
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