Islamabad:
The coalition government is described by political considerations and fiscal restrictions and has proposed an RS1 trillion Public Sector Development Program (PSDP) for FY2025-26-a significant cut from last year’s original RS1.4 trillion allocation.
The reduced PSDP reflects the government’s priority of infrastructure projects, especially roads, often in line with the interests of Coalition. In contrast, funding for education, health, space and atomic energy programs has been scaled back.
The previous year’s PSDP was trimmed in the middle of the year to accommodate power subsidies and meet the IMF program goals. For 2025-26, assignments to SINDH-specific schemes and parliamentarians’ discretionary projects have increased, indicating a slope towards political strategic expenses.
The PSDP 2025-26 book shows the government’s political priorities to reassure allies and use more on roads. The approved reduced budgets for Pakistan’s space and nuclear energy programs, health and education, but increased allocations to SINDH-specific projects and parliamentarians’ schemes.
Large allocations have been proposed for the discretionary expenses for the schemes recommended by parliamentarians, SINDH-specific infrastructure projects and an improved allocation to National Highway Authority. The awards for water, electricity and railways have been drastically reduced to create tax space for the politically oriented projects.
Contrary to this year’s budget of RS25 billion for estimating expenses for parliamentarians’ schemes, the allocation has been proposed to RS70 billion. In the new budget, which shows an increase of 172% in the middle of the tight fiscal space. The Ministry of Defense’s development budget has also increased by 114% to the RS11.6 billion for the new financial year.
For the provinces, allocations of special areas of RS227 billion have been proposed. Within this, the allocation to the provincial projects has been proposed to be increased from RS83 billion to RS106 billion.
The 28% increase in the provincial projects’ assignments has been mainly given to tackle the concerns of the Pakistan Peoples Party (PPP), a cabinet minister said on condition of anonymity.
Pakistan had committed to the IMF that the federal government would not allocate funds to provincial nature schemes. However, such a huge allocation is contrary to this commitment and the national financial pact.
The Higher Education Commission’s budget is drastically reduced to RS39.4 billion, a reduction of RS21.5 billion or 35%. The cut has been created to make room for infrastructure project expenses. The Ministry of Health’s budget is reduced to RS14.3 billion – a reduction of RS10 billion.
Suparco’s budget has been reduced from RS24.2 billion to only RS5.4 Billon – a 77% cut compared to the last year. Pakistan Atomic Energy Commission’s budget is reduced from RS25 billion to RS781 million, a 96%reduction. An official in the Ministry of Finance said these units had self -generated resources and did not need greater allocation from the budget.
Currently, 1,071 development projects with a total cost of RS13.4 trillion are under implementation. These projects require an additional RS10.2 trillion for their end, and the Ministry of Planning estimates that it would take more than a decade to end them all.
The government has also proposed RS16.2 billion to the Ministry of Information Technology, which is lowered by 32% during this year’s award.
The Ministry of Planning stated that the PSDP 2025-26 was formulated under a resource-limited environment, characterized by fiscal discipline, yet guided by an unshakable focus on developmental priorities.
It added that drawing from the lessons in the ongoing PSDP 2024-25 and recommendations from various institutional reviews, including those under the IMF’s Public Investment Management Assessment (PIMA) frames, a thorough review has been carried out to prune the sick and non-executing projects to focus on priority projects contributing to national development, economic growth and URAAN Pakistan Pakistan.
In the new budget, the government has planned to implement or start work with some mega and core national projects. These projects include the N25 Quetta-Karachi, which is financed by increasing the petroleum tax by RS8 per year. Liter.
Other priority projects include Sukkur-Hyderabad Motorway M-6, DASU Hydro Power Project, including evacuation, Diamer Basha Dam Projects, Mohmand Dam, K-IV and Water Augmentation Projects of Karachi, Power to Allama Iqbal Industrial City, Karachi and Islamabad It Parks.
The government has also included the World Bank’s funded Pakistan raises Revenue Project on its priority list, which is considered a failed project.
The Ministry of Planning stated that, among other priority projects, the rebuilding of houses and schools that are damaged in Sindh in floods, after flooding 2022 gene building program in Balochistan, Thar Coal Rail connection, cancer hospital in Islamabad, the Prime Minister’s national program to control hepatitis’ and diabetes.
The document showed that the government has reduced the allocation to the water projects from RS185 billion to RS133.5 billion – a reduction of RS52 billion compared to last year. It also cut the Railway Ministry’s award from RS35 billion to RS22.5 billion – a 37%reduction.
Development budget for developing the electricity sector is reduced from RS105 billion to RS90 billion – a 28%reduction. However, NHA’s budget from RS161 billion is increased to RS227 billion – a jump of RS66 billion or 41%.
The NHA budget has increased to fund major infrastructure projects. Among the priority road schemes, N-5 (phase-i), Mashkhel Panjgur Road and East Bay Expressway Phase-II are expanding and improving.
Strategic progress in space science is also prioritized through Pakistan staffed space mission and Pakistan Lunar Exploration Rover, according to the Ministry of Planning.
