ISLAMABAD: Pakistan utilised only about half of its Public Sector Development Programme (PSDP) allocation during the first 11 months of FY2025-26 despite a significant reduction in the development budget. The slow pace of spending highlighted continued implementation challenges across federal ministries and executing agencies.
According to the Ministry of Planning and Development, total PSDP utilisation reached Rs529.8 billion by the end of May. This represented 52.4 percent of the original allocation of Rs1.01 trillion. The figure remained slightly below last year’s utilisation rate of 54 percent, when spending stood at Rs596 billion against a Rs1.1 trillion allocation.
Meanwhile, the government reduced the PSDP by Rs173 billion following the US-Israel attack on Iran. The cut helped finance fuel subsidies after petroleum prices increased sharply. Consequently, utilisation improved to 63 percent of the revised allocation of Rs837 billion.
The government also accelerated funding for parliamentarians’ Sustainable Development Goals Achievement Programme. It disbursed Rs44 billion, or nearly 70 percent of the revised allocation, within four months, making it the fastest-executed development programme during the fiscal year.
However, spending in Azad Kashmir and Gilgit-Baltistan remained weak. Development expenditure in these regions reached Rs153.86 billion, accounting for only 62 percent of their revised allocation after funding cuts.
Furthermore, the government’s approved release schedule suggested PSDP spending should have exceeded Rs878 billion under the original allocation. Even under the revised budget, utilisation should have reached around Rs730 billion.
Among federal ministries, combined utilisation stood at Rs391 billion, representing 68 percent of revised allocations. The National Highway Authority spent only 46 percent of its budget, while the power sector achieved a utilisation rate of 73.5 percent.
The higher education and federal education sectors emerged among the strongest performers, recording utilisation rates of around 80 percent and 78 percent, respectively. In contrast, the health and information technology sectors spent only 33 percent and 30 percent of their allocations.
Officials said fund authorisations largely matched fiscal targets. However, weak implementation capacity and resource constraints continued to delay development spending across multiple projects.
