Ayesha Saba

The Federal Public Sector Development Programme (PSDP) 2025-26 has allocated Rs229 billion for 86 foreign-funded projects, representing 23% of the total PSDP allocations, highlighting Pakistan’s reliance on external financing to support its development agenda.

According to the latest Monthly Development update for September issued by the Planning Ministry, the PSDP includes 86 foreign-funded projects across various sectors. In line with revised accounting procedures for Revolving Fund Accounts (Foreign Aid Assignment Accounts), notified by the Finance Division in August 2022, sponsoring agencies are required to maintain budgetary rupee cover for all foreign-aided projects.

These expenditures are reported through the Accountant General Pakistan Revenues, State Bank of Pakistan, National Bank of Pakistan, and the Economic Affairs Division (EAD). The Ministry of Planning, Development & Special Initiatives, adhering to the Finance Division’s quarterly release strategy, has been authorising one-liner allocations to ministries and divisions for foreign-funded schemes.

In August 2025, the concerned ministries and divisions reported Rs686 million in foreign aid expenditures, executed strictly under these revised accounting rules. According to a document available with Wealth Pakistan, the Senate Standing Committee on Planning, Development and Special Initiatives recently recommended that the Planning Ministry ensure adequate rupee cover allocations for ongoing foreign-funded schemes under the PSDP 2025-26.

The recommendation aims to facilitate smooth project execution and ensure the timely fulfilment of external funding commitments. Responding to the recommendation, the ministry stated that owing to fiscal constraints, only optimum allocations had been provided as rupee cover to foreign-aided projects. It further reaffirmed its commitment to fiscal discipline, transparency, and efficient resource utilisation to ensure timely completion of foreign-aided projects and to sustain donor confidence.

Credit: INP-WealthPk