ISLAMABAD: Pakistan’s National Economic Council has approved a major cut in the country’s development budget for the next fiscal year after freezing spending at current utilisation levels, officials said.
According to Planning Minister Ahsan Iqbal, the NEC reduced the combined federal and provincial development outlay by one quarter to Rs3.218 trillion from Rs4.264 trillion approved earlier by the APCC.
Development cuts across provinces
Punjab saw the deepest reduction, while Sindh and Khyber Pakhtunkhwa also faced significant downward revisions. Balochistan retained its allocation with minimal change.
Growth targets and fiscal outlook
Officials said the government still targets 4 percent GDP growth supported by agriculture, industry, and services, despite the reduced development spending.
The finance ministry said Pakistan’s economy remains under pressure from global uncertainty, but macroeconomic stability has improved and reform momentum continues.
Prime Minister Shehbaz Sharif said the focus remains on strengthening security, boosting exports and supporting growth through structural reforms.
The NEC also agreed to reorganise development priorities, reduce fragmentation and shift focus towards public private partnerships, export expansion and strategic infrastructure projects. It decided to hold quarterly meetings to monitor progress and address the development deficit through coordinated federal and provincial planning mechanisms.
Officials said foreign assistance worth hundreds of billions will support roads, energy and water sector investments across the country. They added that regulatory reforms will improve the business climate and help sustain long term economic stability despite fiscal constraints. The government reiterated commitment to maintain IMF programme discipline while aiming for higher growth, investment and job creation.
Minister said savings may be redirected to water security, defence and strategic national priorities depending on fiscal space and revenue performance and inclusive regional development and social cohesion goals framework.
