Pakistan’s Public Sector Development Programme (PSDP) for the upcoming fiscal year will be capped at just 2% of the national budget, a sharp reduction from the 10% allocation suggested by the International Monetary Fund (IMF). The move underscores Islamabad’s tight fiscal space and its commitment to sticking to IMF-backed reforms.
Federal Planning Secretary Awais Manzur Sumra revealed the revised spending limit while briefing the Senate Standing Committee on Planning, which met on Friday under the chairmanship of Senator Quratulain Marri. He said the government’s focus will remain on completing key infrastructure and national priority projects rather than starting new ventures.
Trimming Liabilities: Hundreds of Projects Shut or Completed
A detailed review of the current PSDP cycle (2024-25) led to the closure or completion of 344 projects worth a total of Rs2.52 trillion, according to Sumra. This effort cut forward liabilities by roughly Rs2.16 trillion, a major step toward easing financial pressure on future budgets.
While new projects will technically remain capped at 10% of PSDP allocations, Sumra explained that heavy commitments to ongoing schemes mean the effective allocation for 2025-26 is closer to just 2%.
IMF’s Concerns Over Inefficiencies
Sumra also discussed the IMF’s Diagnostic Report, which flagged chronic problems in Pakistan’s development spending model, including poor project selection, cost overruns due to delays, and weak safeguards for allocated funds. The report’s findings mirror long-standing concerns among policymakers about PSDP inefficiencies and wastage.
Shift Toward Automation and Targeted Spending
The Planning Ministry is pushing new reforms to improve efficiency, including the Intelligent Project Automation System (IPAS)—a digital platform designed to streamline budgeting and track project progress in real-time. Senator Marri welcomed the initiative, urging the government to finish existing projects before announcing fresh ones.
The Secretary added that parliamentarians’ discretionary schemes fall under the Cabinet Division, while his ministry’s priority will be accelerating high-impact and “fast-moving” projects. Re-appropriation of funds and technical grants are also being used to prevent delays for near-completion schemes.
