Work is underway on budget proposals for the new fiscal year 2026-27, with the government considering limits on the development budget due to ongoing financial constraints.
According to sources, Pakistan has assured the International Monetary Fund (IMF) that funds for new development projects will be kept at up to 10%, while existing development schemes will be prioritized.
Sources said the government is considering keeping the development budget limited in the next fiscal year because of financial difficulties.
The Ministry of Finance has rejected a proposal to allocate Rs3,000 billion for the Public Sector Development Programme. Officials said the government is focusing on fiscal discipline while preparing budget proposals for FY2026-27.
IMF assured on new development projects
Pakistan has assured the IMF that only up to 10% of development funds will be allocated for new projects. The move is aimed at controlling spending and ensuring that ongoing projects are completed before launching major new schemes.
Sources said this commitment is part of the government’s broader effort to manage development spending under tight fiscal conditions.
Ministries seek funds for over 300 new projects
Various ministries and divisions have sought additional funds for more than 300 new development projects. According to officials of the Ministry of Planning, the total estimated cost of these proposed projects is around Rs7,000 billion.
However, due to financial constraints, approval of large-scale new schemes remains uncertain.
Officials said completion of ongoing development projects has been declared the main priority for the next fiscal year. The government wants to avoid spreading limited funds across too many new projects and instead focus on schemes already under implementation.
This approach is expected to shape the PSDP allocation in the upcoming federal budget.
Rs1,000bn allocated for PSDP this year
In the current fiscal year, Rs1,000 billion was allocated for the Public Sector Development Programme. From July to April, more than Rs450 billion was spent on development projects.
Officials said the total cost of around 1,100 ongoing development projects is more than Rs13,000 billion.
Sources said the throw-forward of PSDP projects is around Rs1,000 billion. This means large future funding requirements remain attached to ongoing development schemes.
The high cost of existing projects is one of the reasons the government is considering limiting new development spending in FY2026-27.
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