ECC orders Rs100 billion PSDP cuts for PM austerity fund

The Economic Coordination Committee (ECC) has directed ministries and divisions to surrender Rs100 billion from Public Sector Development Programme (PSDP) allocations for 2025–26 to be transferred to the Prime Minister’s Austerity Fund, according to a news report. 

The decision follows a briefing by the Finance Division, which informed the committee that the move was based on directives issued after a meeting chaired by Shehbaz Sharif on March 19, 2026, where the impact of Gulf region tensions on petroleum prices was discussed. The funds are intended to settle price differential claims on petrol and diesel.

To implement the directive, the Finance Division requested the Planning, Development and Special Initiatives Division to limit PSDP authorisations to Rs900 billion for the current financial year. Ministries and divisions were subsequently asked to surrender development allocations amounting to Rs100 billion.

The Finance Division sought approval to reallocate the surrendered funds through a Technical Supplementary Grant under its Demand No. 47, followed by their transfer to the Prime Minister’s Austerity Fund 2026. The committee approved the proposal.

The ECC noted that the reallocation would be carried out through adjustments in PSDP allocations across ministries, coordinated by the Planning Division in consultation with principal accounting officers. It added that the exercise is aimed at creating fiscal space while limiting the impact on priority and ongoing projects.

Officials informed the committee that initial fund surrenders have already been received, while remaining adjustments are being finalised to meet the total requirement.