By Moaaz Manzoor

Provincial governments are now spending significantly more on development than the federal government, highlighting the growing role of provinces in driving public-sector investment following the 18th Constitutional Amendment.

According to a presentation prepared for the Annual Plan Coordination Committee (APCC), provincial Annual Development Programmes (ADPs) have expanded considerably over the past decade and now exceed the size of the federal Public Sector Development Programme (PSDP) by a substantial margin.

Official figures show that provincial ADPs are estimated at Rs2.869 trillion in FY2025-26, compared with a federal PSDP allocation of Rs1 trillion.

The gap marks a significant shift from earlier years when the difference between federal and provincial development spending was considerably smaller.

In FY2013-14, the federal PSDP stood at Rs425 billion, while provincial ADPs amounted to Rs615 billion. Provincial spending continued to grow steadily in subsequent years, reaching Rs875 billion in FY2016-17 and Rs1.112 trillion in FY2017-18.

Although provincial development spending declined to Rs674 billion in FY2020-21 amid economic challenges, it rebounded strongly thereafter. Provincial ADPs rose to Rs1.235 trillion in FY2021-22, increased to Rs1.463 trillion in FY2022-23 and reached Rs1.559 trillion in FY2023-24.

The most significant expansion occurred in recent years, with provincial development spending climbing to Rs2.383 trillion in FY2024-25 and further increasing to Rs2.869 trillion in FY2025-26.

In contrast, the federal PSDP has grown at a much slower pace. After reaching Rs1.001 trillion in FY2017-18, federal development spending fluctuated over subsequent years before standing at Rs1 trillion in FY2025-26.

The presentation suggests that provinces are increasingly becoming the principal drivers of public development expenditure in Pakistan, reflecting changes in fiscal responsibilities and resource distribution following constitutional devolution.

The data indicate that provincial governments now spend nearly three times as much on development as the federal government.

According to the document, the trend comes at a time when the federal development portfolio faces mounting financial pressures. The federal PSDP currently carries a throw-forward of Rs10.818 trillion, while ongoing projects require Rs3.377 trillion in FY2026-27 against an Indicative Budget Ceiling of Rs1.126 trillion.

The figures underscore the evolving structure of public-sector development financing in Pakistan, where provinces are playing an increasingly prominent role in funding infrastructure, social services and regional development initiatives.

The presentation highlights how provincial development spending has expanded steadily over the years, reinforcing the growing importance of provincial governments in shaping the country’s development landscape.

Credit: INP-WealthPk