The interim government spent Rs191 billion on development projects in the first seven months of this fiscal year, a shortfall of Rs300 billion or 61% from the target, indicating economic challenges.
The Ministry of Planning reported that expenditures during July-January period were only 38% of the authorised budget. The government aimed to spend Rs494 billion or 52% of the annual budget during this period, falling Rs300 billion short.
The intentional slowdown in spending aims to meet the IMF’s annual primary budget surplus target, but the government missed the target in the first quarter, receiving an IMF waiver for a $706 million tranche.
The gap between authorised and actual expenditures highlights challenges in fund release, slow project progress, and capacity issues. The government aims to offset higher current expenditures by reducing development spending.
During the first review with the IMF, Pakistan committed to fast-tracking spending and prioritizing PSDP to save at least PRs 61 billion.
The NEC directed provinces to take over 68 projects, saving Rs202 billion, including Rs112 billion for the current fiscal year, by banning spending on parliamentarians’ schemes and the prime minister’s initiatives.
However, Sindh and K-P chief ministers questioned the caretaker government’s financial decisions, citing Election Act limitations (Section 230).
In a separate review, the IMF deemed Pakistan’s PSDP “unaffordable” due to limited fiscal space, requiring over 14 years and Rs12 trillion to complete approved projects.
