Federal PSDP spending overshoots FY26 budget as year-end development outlays accelerate

The federal government closed fiscal year 2025-26 with development spending well above its original Public Sector Development Programme (PSDP) allocation, as ministries and state-owned entities accelerated project execution in the final stretch of the fiscal year.

Official Ministry/Division-wise expenditure data shows total PSDP spending reached Rs916.021 billion, compared with an original allocation of Rs820.513 billion. Since Rs820.496 billion had been authorised for release, final expenditure exceeded the budgeted allocation by around Rs95.5 billion, or roughly 11.6%.

The outcome marks a notable reversal from much of FY26, when monthly Planning Commission reports repeatedly indicated that PSDP utilisation was falling behind schedule because of fiscal pressures and constrained releases.

Federal ministries accounted for the largest share of spending, with development expenditure rising to Rs611.105 billion, exceeding their combined allocation of Rs565.138 billion. Corporate entities also spent beyond budget, recording Rs304.916 billion in development expenditure against an allocation of Rs255.375 billion.

The Water Resources Division registered one of the largest overruns during the fiscal year, spending Rs137.49 billion compared with its allocated Rs101.64 billion. The Railways Division also significantly exceeded its budget, with expenditure reaching Rs35.143 billion against an allocation of Rs18.559 billion, while the Revenue Division spent Rs14.813 billion, surpassing its Rs12.214 billion allocation.

Although the Provinces and Special Areas sector received the largest allocation under the federal PSDP at Rs195.383 billion, its utilisation remained broadly within budget, with expenditure totaling Rs192.559 billion.

Among other ministries, the Cabinet Division utilised Rs59.43 billion of its Rs63.237 billion allocation, while the Higher Education Commission (HEC) almost fully exhausted its development budget, spending Rs34.897 billion against Rs34.906 billion allocated. The Federal Education and Professional Training Division marginally exceeded its allocation, recording expenditure of Rs27.043 billion compared with Rs26.81 billion budgeted.

Within the corporate sector, the National Highway Authority (NHA) largely remained within its allocation, spending Rs182.361 billion against Rs182.233 billion budgeted. In contrast, the Power Division, covering projects undertaken by NTDC and PEPCO, recorded development expenditure of Rs122.555 billion, substantially above its Rs73.142 billion allocation, making it the principal contributor to corporate-sector overspending.