As Pakistan moves closer to announcing the federal budget for fiscal year 2026-27, major disagreements have emerged between the Ministry of Planning and the Ministry of Finance over development spending allocations. According to official sources, the planning authorities requested up to Rs. 3 trillion for public development projects in the upcoming budget, but the finance ministry has reportedly refused to approve the full amount.
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This development signals that the government may significantly scale back the number of new public-sector projects in the next fiscal year. Out of more than 300 new development proposals submitted by ministries and divisions, only around 10 percent are expected to make it into the Public Sector Development Programme (PSDP), meaning nearly 90 percent may be dropped or delayed.
The possible decision reflects the government’s increasing financial pressures, rising fiscal commitments, and the urgent need to complete already ongoing projects before starting new ones.
Massive Gap Between Proposed and Available Funds
The Ministry of Planning’s request for Rs. 3 trillion highlights the government’s ambition to speed up infrastructure growth and development initiatives across the country. If approved, this would represent a huge increase in development spending compared with the current fiscal year.
However, the Ministry of Finance appears reluctant to allocate such a large amount due to budget constraints and fiscal discipline targets. Pakistan is already facing economic challenges including debt servicing obligations, pressure to reduce the budget deficit, and commitments under international financial agreements.
Because of these financial limitations, the government is now considering a more cautious development strategy that focuses on limited high-priority projects instead of approving a large number of new schemes.
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Only Priority Projects Likely to Survive
Sources indicate that ministries and departments submitted over 300 new development project proposals worth nearly Rs. 7 trillion for inclusion in the next PSDP. These proposals cover infrastructure, transport, education, water, and other public-sector initiatives.
Despite the massive number of proposed projects, only about 10 percent are likely to receive funding approval. This suggests that the government will prioritize projects that are considered urgent, economically beneficial, or politically important.
The remaining 90 percent of projects may either be postponed or completely excluded from the next budget. This could slow down the launch of new infrastructure initiatives but may help the government manage spending more effectively.
Focus Shifting Toward Ongoing Projects
Another major proposal under discussion is to restrict the next PSDP mainly to ongoing projects. Rather than starting hundreds of new schemes, policymakers want to direct funds toward completing projects already underway.
This strategy is intended to avoid spreading resources too thinly across too many projects. In recent years, Pakistan has often launched more projects than it could adequately fund, resulting in delays, cost overruns, and unfinished infrastructure.
By focusing on existing projects, the government hopes to improve efficiency and ensure that already committed funds produce visible results.
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Current Fiscal Year Development Spending
During the current fiscal year, the federal government allocated Rs. 837 billion for development spending under the PSDP. From July to April, over Rs. 450 billion has already been spent on development projects.
Officials expect that another Rs. 370 billion will be utilized during May and June, allowing the government to spend almost the entire allocated amount by the end of the fiscal year.
This level of utilization shows that while development spending remains active, the available budget is still far below the funding required to support all existing and proposed projects.
Rising Number of Ongoing Projects
Pakistan’s federal development portfolio currently includes around 1,100 ongoing projects with a total estimated cost of approximately Rs. 13 trillion. By the end of the current fiscal year, nearly Rs. 4 trillion is expected to have been spent on these projects.
This means that a very large amount of funding is still needed to complete the remaining projects. The Planning Commission estimates the “throwforward” — the money required to finish ongoing schemes — at around Rs. 10 trillion.
This huge unfinished liability is one of the main reasons the government may avoid approving most new projects in the next budget.
Why the Government Is Tightening Development Spending
There are several reasons behind the likely reduction in new development projects. First, the government is under pressure to control the fiscal deficit and manage public debt. Large-scale development spending increases can make it harder to meet budget targets.
Second, unfinished projects already require trillions of rupees, leaving little room for new commitments. Starting too many new projects would increase the financial burden even further.
Third, policymakers are trying to improve public spending efficiency by prioritizing projects that are near completion or expected to deliver immediate economic benefits.
This more disciplined approach may help improve the quality of development spending, even if it reduces the number of new initiatives.
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Impact on Infrastructure and Public Services
If 90 percent of new projects are dropped, the immediate impact will likely be felt in infrastructure expansion and public services development. Planned projects in roads, education, health, and water management may face delays.
This may disappoint provinces, departments, and communities that were expecting funding for new initiatives. However, completing ongoing projects can also bring important benefits by making sure unfinished infrastructure becomes operational.
In the long term, better prioritization could improve the effectiveness of public investment, provided that funds are used transparently and efficiently.
FAQs
1. Why is the government dropping 90% of new development projects?
The government is considering dropping most new projects because of budget constraints, rising debt obligations, and the need to complete ongoing development schemes first.
2. How much development funding was requested for the next budget?
The Ministry of Planning requested up to Rs. 3 trillion for development spending in the 2026-27 budget.
3. How many new projects were proposed?
More than 300 new development projects were proposed by ministries and divisions for the next fiscal year.
4. What is the current value of ongoing federal projects?
The federal government currently has around 1,100 ongoing projects worth approximately Rs. 13 trillion.
5. What is throw forward in PSDP projects?
Throw forward refers to the amount of money still required to complete ongoing development projects, which is currently estimated at around Rs. 10 trillion.
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Final Words
Pakistan’s upcoming federal budget is expected to reflect strict spending priorities, with the government likely approving only a small fraction of proposed new development projects. While this may slow the launch of fresh initiatives, it also highlights the urgent need to complete existing projects and improve financial discipline. By focusing on high-priority schemes and reducing unnecessary expansion, the government aims to manage limited resources more effectively.