In an era of climate shocks, supply-chain disruptions and intensifying global competition, development success is no longer determined simply by how much a country spends but by how effectively it aligns and coordinates what it can afford.
Across the world, countries with limited fiscal space are achieving outsized results not through abundance, but through coherence. Those that fail to coordinate – even when they spend heavily – struggle with duplication, inefficiency and public frustration. Development today is less about volume and more about velocity, direction and alignment.
For Pakistan, this challenge is especially urgent. Fiscal space has narrowed sharply, and development resources are under constant pressure from debt servicing, stabilisation demands and rising public expectations. In such an environment, coordination is the highest-return reform available to the state.
Pakistan still invests close to Rs4 trillion annually in public development across federal and provincial governments. The issue is not whether resources are unlimited, but whether the impact of every development rupee is amplified by national coherence or diluted by fragmentation.
Without an integrated coordination mechanism, even substantial spending yields uneven outcomes, duplicate initiatives and missed opportunities for scale – precisely when Pakistan can least afford inefficiency.
Pakistan now faces a defining test: whether it can act as one economy while governing through many governments. This test has been sharpened by recent fiscal realities. After years of macroeconomic stress, repeated stabilisation cycles and external shocks, fiscal space has narrowed sharply. The federal government’s development budget has contracted from 2.8 per cent of GDP in 2018 to around 0.9 per cent in 2025. Debt servicing pressures, inflation control and stabilisation have imposed difficult but unavoidable trade-offs.
Viewed in isolation, this contraction can create the impression that Pakistan’s development effort has collapsed. That impression is misleading. When Pakistan’s development efforts are viewed in their entirety, a different picture emerges. Today, Pakistan invests approximately Rs4 trillion annually in development – around Rs.1 trillion through the federal PSDP and nearly Rs3 trillion through provincial ADPs. This compares with a total development outlay of Rs2,113 billion in 2017–18, when federal and provincial shares were nearly equal.
In less than a decade, the federal share of national development spending has declined from roughly 50 per cent to 25 per cent, while provincial shares have increased from 50 per cent to 75 per cent.
This shift reflects the evolving architecture of fiscal federalism. Provinces now receive close to 60 per cent of divisible pool revenues under the NFC Award, while the federal government – despite constraints – has expanded overall tax mobilisation. Decentralisation has strengthened provincial ownership and democratic accountability. But decentralisation without coordination carries costs.
This reality makes coordination not less important, but more critical than ever. The central question, therefore, is not whether Pakistan is spending enough on development but why this vast national outlay is failing to generate proportional economic transformation, reduce regional disparities or create sustained growth momentum. The answer lies in a structural weakness we must now address decisively: the absence of cohesion in our development effort.
Pakistan today runs a Rs4 trillion annual development enterprise without a fully integrated command-and-coordination system. Major initiatives lose momentum as they move from conception to implementation. Infrastructure is planned in isolation rather than as part of integrated economic corridors. Export zones emerge without synchronised logistics, skills, energy pricing or trade facilitation. Social outcomes vary sharply across regions.
Fragmentation imposes hidden but heavy economic penalties: slower growth, inefficient capital allocation, low productivity and unmet public expectations. Citizens experience these costs not as abstract policy failures, but as stalled opportunities. A core flaw in fragmented planning is that it misunderstands how economies actually function. Citizens do not experience inflation, unemployment, food insecurity or digital opportunity through provincial boundaries. Businesses operate across provinces. Labour migrates internally. Supply chains require continuity. Export competitiveness depends on coordination.
Without cohesion, the federation cannot unlock scale. Without scale, public investment delivers limited and uneven returns. Fragmentation may deliver projects, but it cannot deliver transformation. Pakistan’s constitution anticipated this challenge. Article 156 establishes the National Economic Council (NEC) as the apex forum for economic coordination – mandated to review the country’s economic condition and advise on fiscal, commercial, social and economic policies. Its purpose is explicit: to ensure balanced development, reduce inter-provincial disparities and align the federation around shared national priorities.
The NEC was never meant to be ceremonial. It was designed to be the nerve centre of economic federalism. Yet over time, its role has weakened. Plans are approved, but outcomes are rarely reviewed collectively. Alignment is discussed episodically, not enforced systematically.
A structural asymmetry has emerged. The federal government routinely places its PSDP and Annual Plan before the NEC for scrutiny. Provinces, quite rightly, examine federal priorities. But provincial development plans – now far larger in scale – are rarely brought to the NEC with the same depth of transparency or commitment to alignment. This creates an unhealthy dynamic in which national coherence becomes a one-sided obligation. The implicit mindset becomes: mine is mine, and yours – the federal PSDP – is negotiable.
Such an approach weakens collective ownership of development and, ultimately, the federation itself. The 18th Amendment rightly devolved authority to the provinces, but devolution was never intended to create policy silos. Across successful federations, autonomy delivers results only when anchored in coordination. Provinces enjoy flexibility in execution, but within a shared national framework that maximises collective outcomes. Central governments do not micromanage provinces; they ensure alignment on national priorities, standards and outcomes.
Nowhere is the cost of fragmentation more evident than in climate change. Floods, droughts, heatwaves, food insecurity and water stress do not respect provincial boundaries. Yet resilience efforts remain scattered, pursued through disconnected projects rather than integrated strategies. Pakistan’s climate vulnerability requires a unified response that links water management, agriculture, urban planning, disaster resilience and the energy transition across the federation.
Pakistan’s national development roadmap – anchored in the 5Es Framework – provides a coherent vision for transformation. But vision alone does not deliver results. The 5Es can succeed only if implemented collectively across all federating units. With Rs4 trillion in annual development spending, the cost of fragmentation is simply too high.
The NEC must therefore evolve from approving plans to reviewing results and outcomes. From episodic meetings to continuous monitoring and coordination. From parallel spending to shared national outcomes. This requires concrete institutional reform. The Ministry of Planning & Development has proposed strengthening the NEC Secretariat by embedding the technical and analytical capacity of the Planning Commission, supported by real-time data systems.
The NEC should mandate systematic presentation of provincial ADPs alongside the federal PSDP, introduce joint outcome scorecards in priority sectors such as exports, population management, climate resilience, digital infrastructure, stunting and food security, and establish common policy frameworks where fragmentation imposes national costs – while preserving flexibility in execution.
The choice before us is clear. Pakistan can continue spending trillions in fragments or align its federation behind one economy, one direction and one shared destiny.
The NEC already exists at the heart of our constitution. What is required now is not a new institution, but the political will to fully activate the one we already have. That choice will determine whether Pakistan’s development spending merely builds projects or finally delivers transformation.
The writer is the federal minister for planning, development, and special initiatives. He tweets/posts @betterpakistan and can be reached at:
