ISLAMABAD: Under the tight noose of the International Monetary Fund (IMF) programme, the development budget has proved to be the major victim, as the utilisation of development funds so far stands at Rs528 billion against an allocation of Rs1,000 billion.
According to a working paper presented before the Annual Plan Coordination Committee (APCC), chaired by Minister for Planning Ahsan Iqbal on Monday, the government had allocated Rs1,000 billion for the Public Sector Development Programme (PSDP). Out of this, ministries, divisions and executing agencies utilised Rs528 billion from July 2025 to May 25, 2026, indicating that slightly over 50 percent of funds could be utilised on the ground.
The throw-forward was hovering close to Rs10 trillion at the start of the outgoing fiscal year. Out of the Rs1,000 billion allocation, the rupee component was Rs770.5 billion, while the remaining Rs229.5 billion were earmarked as foreign aid for development projects. The government has so far authorised Rs 835 billion, of which Rs528 billion had been utilised by May 25, 2026.
The APCC was informed that due to prevailing economic and energy shocks, the Finance Division imposed two cuts totaling Rs172.8 billion on the PSDP 2025-26 to absorb the financial impact. Consequently, the PSDP size of each ministry and division was reduced or rationalised, and the revised PSDP size for 2025-26 was set at Rs837.17 billion. However, it was emphasised that ministries and divisions should re-prioritise budgeted projects and concentrate on those that have reached an advanced stage for completion, as well as foreign-funded projects during the current fiscal year.
To meet the demands of important prime minister’s initiatives, a committee was formed by the prime minister. The committee recommended funds of Rs20.05 billion, to be sourced through adjustments in the PSDP 2025-26, for key development initiatives.
While approving the PSDP for FY 2025-26, the National Economic Council (NEC) authorised the Planning Commission to recommend necessary adjustments and re-appropriations to provide additional funds to fast-moving projects within the overall size of the PSDP 2025-26. Moreover, the Financial Management and Powers of PAOs Regulations, 2021, empower ministries and divisions to undertake re-appropriations within their respective budgeted portfolios.
To meet critical additional demands for core or mega-projects of national importance, foreign-aided projects, and near-completion or fast-moving projects, an amount of Rs53 billion was re-appropriated for 109 projects by ministries and divisions during July 2025–May 2026. Additionally, Technical Supplementary Grants (TSGs) amounting to Rs36 billion for 20 projects were recommended within the approved size of the PSDP FY 2025-26.
These funds were identified during the 3rd Quarter Review of the PSDP from savings and were recommended to meet pressing demands of important projects under the Ministries of Industries and Production, Interior Division, NHSR&C Division, etc, through inter-sectoral adjustment. Approximately 194 projects were indicated to be completed by June 2026. The total cost of these projects was Rs592 billion, with an allocation of Rs76 billion in the PSDP 2025-26. The ministries and divisions assured completion of these projects, but due to the reduced size of the PSDP, that target could not be achieved.
