Pakistan's Public Sector Development Program Utilized Just Half of FY26 Budget
Pakistan's government and its agencies utilized only 52.4% of the original Rs1.01 trillion Public Sector Development Programme (PSDP) budget during the first 11 months of fiscal year 2026 (July 2025 to May 2026), amounting to Rs529.8 billion. This utilization rate is lower than the 54% recorded in the same period last year. The development outlay was further reduced by Rs173 billion to finance fuel subsidies following an increase in oil prices after a US-Israel attack on Iran, revising the budget envelope to Rs837 billion.
Pakistan's Public Sector Development Programme (PSDP) for fiscal year 2026 saw approximately half of its budget spent in the first 11 months, from July 2025 to May 2026. The total utilization stood at Rs529.8 billion against an original allocation of Rs1.01 trillion, representing 52.4 percent of the budget.
This performance marks a slight decrease from the previous fiscal year, when PSDP expenditure reached Rs596 billion, or 54 percent of its Rs1.1 trillion allocation during the same period. A 17 percent cut in allocations occurred during the fiscal year, primarily due to the government's decision to slash Rs173 billion from the PSDP to fund fuel subsidies, which became necessary after a surge in petroleum prices following what was described as a US-Israel attack on Iran. With this reduction, the revised PSDP envelope was Rs837 billion, against which the utilization improved to 63 percent.
Disbursements for various projects showed varied progress. Parliamentarians’ schemes, known as the Sustainable Development Goals (SDGs) Achievement Programme (SAP), saw Rs44 billion disbursed, accounting for 70 percent of the authorized Rs63.236 billion by the end of May. These funds were authorized and spent within approximately four months, indicating a swift execution.
In contrast, development activities in special regions, including Azad Kashmir and Gilgit-Baltistan, received only Rs153.86 billion. This sum represents 62 percent of their Rs249.2 billion annual allocation, which had already been cut by Rs52 billion for fuel subsidies. Most federal ministries utilized Rs391 billion, 68 percent of their revised allocation of Rs577 billion.
Key infrastructure sectors also reported mixed utilization. The National Highway Authority (NHA) spent Rs85 billion, or 46 percent, of its Rs185 billion revised budget, while the power sector utilized Rs53.7 billion, or 73.5 percent, of its Rs75 billion revised allocation. The water sector, despite the country's water scarcity, utilized Rs69.9 billion, or 65 percent, against its revised allocation of Rs106.6 billion.
Conversely, the higher education sector performed strongly, spending Rs28 billion, or nearly 80 percent, of its Rs35 billion revised allocation. The Ministry of Federal Education and Professional Training also utilized Rs21 billion, about 78 percent of its Rs27 billion allocation. Sectors like National Health Services and the Information Technology Division, however, lagged significantly, utilizing only 33 percent and 30 percent of their respective budgets.
Despite widespread authorizations by the Planning Commission, which approved Rs835.6 billion (almost the entire revised PSDP of Rs837 billion), actual utilization lagged due to resource constraints and the weak implementation capacity of executing agencies. The PSDP portfolio includes 86 foreign-funded projects, with a total cost of Rs4.2 trillion, for which a rupee cover of Rs229 billion was allocated for FY26.
According to the Ministry of Planning and Development, the government's finance division had established a release mechanism aiming for 87 percent utilization of the original allocation, or 878 billion rupees, by this point in the fiscal year. (Source: Dawn Pakistan)
