IT should be a matter of real concern for policy-makers and planners of the country that spending under the Federal Public Sector Development Programme (PSDP) remained subdued in the first five months of the current fiscal year, with utilisation amounting to just 9.2 per cent of the Rs1 trillion annual allocation.
This sorry state of affairs is mainly attributed to the fiscal rationing to meet the IMF’s contingency measures for growing revenue shortfall. The Ministry of Planning and Development revealed in its Monthly Development Outlook (December 2025) that at Rs. 92 billion, the July-November utilization was 20% lower than the Rs.115 billion spent in the same period last year due to signifi-cant reduction in expenditure by provinces, special areas and the Ministry of Railways.
Experts point out that generally low development spending, an almost regular phenomenon in Pakistan, is primarily caused by persistent fiscal imbalances, high public debt, weak domestic resource mobilization (tax collection), poor governance, political instability and a focus on short-term consumption over long-term investment. These factors combine to create a challenging economic environment that limits the fiscal space for essential development expendi-tures. It is unfortunate that the development budget is axed every year to make up for deficiency of funds for other purposes, mostly non-development expenditure. In fact, there is a need for a substantial increase in development spending as this promotes economic activities and creates employment opportunities in different parts of the country but it has been observed that the development projects face cuts whenever the authorities find it difficult to manage finances. Apart from a general tendency to cut development funds, the sanctioned money remains unutilized due to lethargic attitude of the sponsoring ministries and departments, low capacity for utilization, flaws in PC-Is, frequent changes in design and scope and corruption and as a result the original cost escalates phenomenally. Delays so caused put additional burden on the national exchequer, squeeze availability of funds for new projects and deprive the coun-try and its people of the intended benefits of development projects and programmes. Infrastructure being critical for economic and industrial activities should receive priority by the Government as the private sector hardly invests in such projects but the report of the Ministry shows it was one of the worst sectors in terms of non-utilization. This sec-tor had been allocated Rs. 626.767 billion (63%) in FY26, of which Rs. 55.238 billion had been utilized till Nov 30. Within infrastructure, the transport and communication sector received the highest allocation of Rs. 333.484 billion, which posted an expenditure of Rs. 30.433 billion. The science and information technology sector recorded an expen-diture of Rs. 3.619 billion as of mid-December against an allocation of Rs. 37.586 billion. The Ministry claimed that development trajectory is steadily improving as high-priority initiatives in health, education, infrastructure, energy and governance are enhancing economic efficiency and social impact but this priority is not reflected in development spending. In this backdrop, the Government has rightly decided to prioritize fast-moving schemes, strengthen project execution and ensure timely allocations to maximize development impact. Under the mechanism announced by the Ministry of Finance for the current fiscal year, the government should release 15% of budgeted allocation in the first quarter, followed by 20% in the second quarter, 25% in the third and the remaining 40% in the last quarter. If the Government is committed to the schedule, it is the responsibility of the Ministry of Planning and Development to hold relevant ministries and institutions accountable for slow movement of projects. The sponsoring ministries and depart-ments are bound to submit regular reports on different aspects of project execution and the efficiency can be increased through frequent interaction with other relevant ministries.
