The federal government plans to allocate Rs1 trillion for development spending under the Public Sector Development Programme (PSDP) in the upcoming fiscal year 2025–26, well below the Rs3 trillion sought by various ministries, according to official budget documents seen by media publication, The News.
The Ministry of Finance initially set a development ceiling of Rs921 billion, which was later revised upward to Rs1 trillion. However, this figure remains significantly lower than last year’s original allocation of Rs1.4 trillion, which was revised twice to eventually stand at Rs1.096 trillion.
So far, only 54% of the revised FY25 development outlay—equivalent to Rs593 billion—has been utilised during the first 11 months, raising concerns about the pace of project execution.
Among the proposed FY26 allocations, the Cabinet Division is expected to receive Rs50.33 billion, making it one of the biggest beneficiaries. Other allocations include Rs1.10 billion for the Board of Investment to support investment promotion, Rs2.78 billion for the Ministry of Climate Change, Rs400 million for the Commerce Division, and Rs200 million for the Communications Division.
The Defence Division has been allocated Rs11.55 billion, with an additional Rs1.78 billion for the Defence Production Division. The Establishment Division is likely to receive Rs495 million.
The government also plans to continue the controversial Sustainable Development Goals (SDGs) Achievement Programme, widely viewed as a discretionary fund for parliamentarians from treasury benches. In the current year, 71% of its Rs48 billion revised allocation—equivalent to Rs35 billion—has already been spent.
The upcoming budget, to be presented by Finance Minister Muhammad Aurangzeb on June 10, is expected to be a reform-heavy, IMF-guided fiscal blueprint aimed at stabilising the economy through fiscal consolidation, development prioritisation, and targeted relief measures.
Originally scheduled for June 2, the budget was delayed due to ongoing negotiations with the IMF, particularly around proposals for tax relief for the salaried class.
Despite progress in talks and emerging consensus on some relief measures, analysts warn that the government faces an uphill battle in meeting the proposed Rs14.2 trillion revenue target, especially in light of a widening shortfall against the current year’s revised tax collection target of Rs12.33 trillion.
According to market estimates by Topline Securities and Arif Habib Limited, Pakistan is likely to maintain a positive primary balance, aiming for a 1.6% share of GDP in FY26.
