BUDGET 2026-27: IMF-mandated curbs squeeze development spending

PK · 2026-06-02 · Dawn Pakistan

• Only Rs1.13tr allocated to PSDP against Rs4.1tr requirement; minister terms shortfall ‘new circular debt crisis’ • Record Rs4.715tr development plan unveiled • APCC resolves to divert resources to ongoing projects ISLAMABAD: Under tight International Monetary Fund (IMF) oversight, the government has trimmed allocations for most sectors in the next federal development programme to create additional fiscal space for the PML-N’s trademark national highways, a new Rs87 billion share for coalition partners and a Rs70bn allocation for ruling party lawmakers’ schemes. Yet, the Annual Plan Coordination Committee, led by Planning and Development Minister Ahsan Iqbal, on Monday unveiled a record national development programme of Rs4.715 trillion, made possible by an unprecedented 27pc hike in development allocations by state-owned entities and a 10pc rise in provincial allocations to an all-time high of Rs3.138tr. The overall Rs4.715tr development portfolio comprises the largest share of provincial annual development plans (ADPs) at Rs3.138tr (up 9.6pc), followed by the federal Public Sector Development Programme (PSDP) of Rs1.126tr, up 12.6pc from the current year, and Rs451bn from SOEs, up 27pc from Rs355bn in the current fiscal year. However, the federal PSDP allocation of Rs1.126tr for next year disappointed the planning minister, who described it as “a new circular debt crisis”, with almost Rs11tr in throw-forward liabilities from around 800 ongoing projects that would be impossible to complete over the next decade. He said he had requested the prime minister for a minimum allocation of Rs2.9tr for development next year against actual requirements of Rs4.1tr, but the Ministry of Finance could spare only Rs1.126tr owing to IMF restrictions. Mr Iqbal said development projects had come to a standstill over the past eight years after record development investments between 2013 and 2018. He said it should be a matter of shame that the country continued t...

Original source: Dawn Pakistan