Development spending under the federal Public Sector Development Programme (PSDP) remained low during the first five months of the current fiscal year, with utilisation reaching 9.2% of the Rs1 trillion annual allocation amid fiscal restraint tied to commitments made under the IMF programme.
According to the Ministry of Planning and Development’s Monthly Development Outlook for December 2025, Rs92 billion was spent between July and November against Rs196 billion sanctioned for the period. The ministry said infrastructure projects accounted for most of the spending, while foreign-funded projects showed relatively higher utilisation, with Rs12.8 billion spent out of Rs25.1 billion approved.
The Rs92 billion spent during July–November was 20% lower than the Rs115 billion utilised in the same period last year. The ministry attributed the slowdown to reduced spending by provinces, special areas and the Ministry of Railways.
Sector-wise data showed that infrastructure received Rs626.77 billion, or 63% of the total PSDP allocation for FY26, of which Rs55.24 billion had been utilised by November 30. Within infrastructure, transport and communication accounted for the largest allocation of Rs333.48 billion, with spending of Rs30.43 billion.
The energy sector recorded expenditure of Rs3.52 billion against an allocation of Rs122.65 billion, while physical planning and housing spent Rs7 billion out of Rs72.73 billion. This translated into utilisation of less than 3% for energy and 9.6% for physical planning and housing over five months.
The water sector, allocated Rs98 billion, reported spending of Rs14.28 billion, equivalent to 14.6%. Utilisation was relatively higher in the social sector, which was allocated Rs169.31 billion. Within this, the education sector, including higher education, spent Rs12.29 billion out of an allocation of Rs60.75 billion.
Health and nutrition recorded particularly low utilisation, with Rs211 million spent against Rs16.8 billion, or 1.25%. Spending under the “Others” category stood at Rs2.12 billion out of Rs21.7 billion, while transparency and governance initiatives utilised Rs1.02 billion against Rs11.17 billion.
The science and information technology sector spent Rs3.62 billion out of Rs37.59 billion, while food and agriculture utilised Rs605 million out of Rs5.1 billion. The industrial sector recorded spending of Rs227 million against an allocation of Rs2.86 billion.
The report noted that the government has provided written contingency commitments to the IMF following a $1.2 billion disbursement, as the cumulative revenue shortfall reached Rs430 billion in the first five months.
Under these commitments, if Federal Board of Revenue collections continue to underperform in the second quarter of FY26 and other receipts fail to compensate, the government would, in consultation with the IMF, raise federal excise duty on fertilisers and pesticides by five percentage points, impose FED on high-value sugary items, and shift selected goods from the Eighth Schedule to the standard sales tax regime.
It further stated that if revenue losses linked to the National Tariff Policy persist by the end of the second quarter, the government would defer an equivalent amount of expenditure to the final quarter of FY26.
Despite a budget surplus of 1.6% in the first quarter, supported by higher State Bank profits and petroleum levy collections, development releases remained limited. The government has also moved to close a large number of projects to concentrate funding on strategically important schemes nearing completion.
The report said the PSDP portfolio included 86 foreign-funded projects with a total foreign cost component of Rs4.2 trillion. Of these, 15 projects were fully financed through external funding, while the remaining were implemented with local counterpart contributions.
A PSDP review conducted between November 10 and 12 found that Rs90 billion had been utilised in the first quarter and that 313 projects were expected to be completed during the fiscal year. The government has prioritised fast-moving schemes, strengthened execution and aimed to improve the timing of fund releases.