By Abdul Ghani

Pakistan maintained development spending under the Public Sector Development Programme (PSDP) despite fiscal constraints and external economic pressures, with expenditure reaching nearly Rs470 billion by April FY2025-26.

According to the Monthly Development Update issued by the Ministry of Planning, total PSDP expenditure stood at Rs469.8 billion against sanctioned funds of Rs571.2 billion. The federal PSDP size for FY2025-26 was revised downward from Rs1.096 trillion to Rs837.2 billion due to austerity measures and fiscal pressures arising from global oil price volatility and geopolitical uncertainties.

The report stated that overall utilization reached 56 percent by April 2026. Infrastructure remained the largest spending category with allocation of Rs516.2 billion, out of which Rs276.1 billion was utilized, reflecting 53 percent expenditure.

Within infrastructure spending, the transport and communication sector received allocation of Rs270.6 billion and utilized Rs82.2 billion. Water sector projects recorded strong utilization of 80 percent, with expenditure of Rs65.5 billion against allocation of Rs82.2 billion.

The energy sector also remained a major priority, with Rs58.9 billion spent—equivalent to 58 percent of the allocated amount. Physical Planning and Housing projects utilized Rs37.3 billion against allocation of Rs61.1 billion showing 61 percent.

Social sectors showed comparatively stronger spending performance. The social sector allocation stood at Rs147.2 billion, out of which Rs95.2 billion was utilized, indicating 65 percent expenditure. Education and Higher Education Commission projects recorded 74 percent utilization, while health and nutrition programs utilized 30 percent of allocated funds.

Special Areas including Gilgit-Baltistan and Azad Jammu and Kashmir recorded the highest utilization ratio of 89 percent with expenditure reaching Rs60.4 billion against allocation of Rs67.7 billion.

The report noted that development spending remained focused on infrastructure expansion, social protection, education, healthcare, governance reforms, and regional development. Authorities continued emphasizing efficient allocation of limited fiscal resources to maximize public welfare and economic impact.

Foreign-funded projects also remained an important component of development financing. The PSDP portfolio included 86 foreign-funded projects with total rupee cover allocation of Rs229 billion. According to SAP records, expenditure on foreign-funded projects reached Rs94.8 billion.

The World Bank remained the largest development partner with sanctions worth Rs50.4 billion, followed by Asian Development Bank with Rs20.9 billion and multiple donor-supported projects amounting to Rs15.8 billion.

The report stated that despite external shocks and fiscal pressures, the government maintained commitment to development priorities through targeted investment, monitoring mechanisms, and institutional coordination. Policymakers believe sustained public investment is necessary for improving infrastructure, supporting employment generation, and promoting long-term economic growth.

Credit: INP-WealthPk