In a move aimed at stabilising the economy and driving key reforms, the federal government is planning to earmark Rs1 trillion for development projects in the upcoming fiscal year 2025-26.
This allocation, though significant, falls well short of the Rs3 trillion demand put forward by various ministries, according to official documents.
Initially, the Finance Ministry had set an indicative ceiling of Rs921 billion. However, after internal consultations and increasing pressure from stakeholders, the cap was revised upwards to Rs1 trillion. This development funding is part of the Public Sector Development Programme (PSDP), which plays a crucial role in boosting infrastructure, public services, and economic reform.
A sizeable portion of the Rs1 trillion for development is set to benefit the Cabinet Division, which is proposed to receive Rs50.33 billion — one of the highest among federal departments. Other notable allocations include Rs11.55 billion for the Defence Division and Rs1.78 billion for the Defence Production Division.
The government has also shown a renewed focus on environmental and investment initiatives. The Ministry of Climate Change is expected to receive Rs2.78 billion, while the Board of Investment has been earmarked Rs1.10 billion to enhance foreign investment efforts. The Commerce Division is set to get Rs400 million, and the Communications Division will receive Rs200 million.
Smaller yet important divisions such as the Establishment Division are also in line to receive Rs495 million, reflecting the government’s broader commitment to administrative strengthening.
Interestingly, the controversial SDGs Achievement Programme — largely reserved for treasury bench parliamentarians — has already consumed 71% of its revised Rs48 billion allocation, amounting to Rs35 billion. This raised eyebrows as overall development fund utilisation stands at only 54% — Rs593 billion — during the first 11 months of the current fiscal year, out of a revised Rs1.096 trillion budget.
Originally, the PSDP had a development outlay of Rs1.4 trillion, including Public-Private Partnership projects. However, due to financial constraints and shifting priorities, the figure was revised down twice — first to Rs1.25 trillion and then to Rs1.096 trillion.
The upcoming budget, scheduled to be presented in the National Assembly by Finance Minister Muhammad Aurangzeb on June 10, is widely expected to be IMF-guided and reform-centric. It aims to strike a delicate balance between fiscal consolidation and economic growth, while also targeting a primary balance improvement of 1.6% of GDP.
Market analysts, including Topline Securities and Arif Habib Limited, believe the government is on course to maintain its track record of fiscal discipline — a key demand by the International Monetary Fund as talks over tax relief continue.
With just one month left in the current fiscal year, all eyes are now on how much of the revised development budget will actually be utilised — and whether the new budget can deliver the promised reforms without stifling much-needed economic growth.
