• Assignments for almost all cut sectors, except for road construction projects and parliamentary schemes; Food, water, energy and reduced social sectors
• The Government assigns RS880BN for the public sector development program, less than 20 percent of the current year
• Provinces to launch at RS2.80tr under the annual plan to increase elevation spending
• The Development Plan prioritizes the Bhasha dam, RS120BN Balochistan Highway
• Ahsan Iqbal says that more than 100 projects worth RS1tr to the face cuts
Islamabad: Under the strict control of the International Monetary Fund (IMF), the Federal Development Program next year reduces allocations for almost all sectors, except for an increase in road construction schemes and unchanged in the schemes of the parliamentarians.
Despite this, the Annual Planning Coordination Committee (APCC) cleared the National Development Program for a record of RS4.083 billion, helped by Punjab and Sindh, which shows a greater financial muscle than the center that is very discouraged by a greater financial return, debt service and security needs.
Based on this expense, the Government established next year’s growth objective in 4.2pc, backed by a 4.4pc objective in agricultural production, 4.3pc in the industry and 4pc in the services sector, and an inflation rate at 7.5pc.
The Minister of Planning and Development, Ahsan Iqbal, who presided over the meeting, did not put words about the unprecedented fiscal limitations and asked the provincial representatives to convince their leadership that they no longer seek federal funds, given their fattened kittens.
He said that Pakistan faced some limitations with the IMF program and, therefore, the challenge ahead was to take advantage of the limited resources to achieve the maximum performance of each project to satisfy the goals and objectives described in the National Economic Transformation Plan, the five -year plan based in 5ES and the “Uraan Pakistan program”.
However, the provinces indicated that it is possible that they cannot provide surpluses in cash with those who committed to the center and the IMF under the National Fiscal Pact, given the RS1TR income deficit by the FBR and the resulting decrease in its part.
Given the limitations, the APCC decided to prohibit the approval of the development schemes by the departmental work parties (DDWP) of several ministries and divisions until the conclusion of the IMF program.
“Therefore, the policy decision regarding the moratorium on the approval of DDWP level projects until the end of the IMF program so that focus on the MEGA can be made at the national level and the projects financed with foreign financing,” said the Ministry of Planning, added: “This will guarantee financial discipline, reduce the progress and focus on critical projects nationwide, particularly in the sectors of water and transport.”
Therefore, the Government assigned RS880BN for the Public Sector Development Program (PSDP) for next year, 20 percent compared to the reviewed allocation of the current year of RS1.1tr and 37pc lower than the original budget allocation of the current year of RS1.4tr. However, the Government launched the PSDP at RS1TT after also including RS120BN for the N-25 highway in Baluchistan that will be generated through an additional oil tax imposed by the Prime Minister last month.
Lower assignments
But despite these challenges, the Government has allocated RS50BN for the schemes of the parliamentarians, without changes of the RS50bn of the current year. Similarly, the allocation for fused districts would also remain unchanged in RS70 billion. The transport and communication sector is the only sector where the assignments have increased for next year to RS332BN against RS268BN during the current year.
All other sectors, including special areas, such as Kashmir and Gilgit-Baltistan, would be harmed by lower allocations. The infrastructure sector would only obtain RS644BN next year against RS661BN during the current year. The allocations of the energy sector would be reduced to RS144BN next year from RS169BN this year, while the allocation of the water sector would fall to RS109BN next year from RS135BN this year despite the aggressive Indian movements. Assignments for physical planning and housing would be immersed in 34pc to RS59BN next year from RS89BN. The social sector would also face an important tax tightening, since it would only obtain RS150BN next year compared to RS200BN this year, for a room.
The proportion of special areas, AJK and GB, has been reduced by 16pc to RS63bn of RS75BN during the current year. The assignments for science and technology would also decrease to RS53BN next year from RS62BN this year, while governance -related projects would submerge in almost half to RS9BN from RS17BN.
The production sectors would only obtain RS11BN next year compared to RS15BN and the main loser would be food and agriculture whose assignment would be submerged to only RS3BN of RS8BN.
The four provinces would assign around RS2.795 billion. This included RS1.188TR in Punjab, approximately RS888bn of Sindh, which would increase it to RS1TR, followed by an annual development plan of Khyber Pakhtunkhwa and RS280bn of Baluchistan.
The federal state entities would invest around RS288BN next year, carrying the total development expenditure to approximately RS4.083TR, which can increase as the provinces obtain their final budgets. The consolidated disbursement of RS4.083TR is almost 21 percent higher than the current year, mainly due to a greater participation of the provinces.
Restricted fiscal space
The planning minister emphasized that despite the restricted fiscal space and competitive demands, the government was completely committed to maintaining the impulse of development through the strategic realignment of resources, the planning based on performance and the greatest coordination with the provinces. He reiterated that Government’s vision is to direct Pakistan to become an economy of $ 1 billion for 2035 and $ 3 billion by 2047.
As of May 31, RS1.036tr had been authorized and RS596 billion were used. A total of 1,071 projects were included in the PSDP, with an approved cumulative cost of RS13.427TR. The launch liabilities of rupees were located in RS10.216TR, which caused a strong impulse for the rationalization of the project.
The RS1TR PSDP includes foreign aid of RS270B with priority to the Diamer-Bhasha dam and the launch of the Hyderabad-Sukkur highway in fiscal year 2025–26 in line with political commitments.
Regarding low priority projects that could be freezing or closing, the minister said that the Government has identified 118 projects worth RS1,000 billion that must be of low priority or limited to save resources, he reported Dawn.com.
Posted in Dawn, June 3, 2025
