ISLAMABAD: Spending under the Public Sector Development Programme (PSDP) is struggling to take off as the government keeps a tight lid on disbursements to show fiscal discipline to the International Monetary Fund (IMF).

The total spending on PSDP in the first four months (July-October) of 2025-26 amounted to Rs76 billion — just 7.6pc of the Rs1 trillion allocation for the year, which was lower than the previous fiscal year. The actual utilisation was far lower than Rs330bn authorised by the Planning Commission.

This alarming spending pattern about public interest projects having impact on living standards of the people and economic growth has come about despite a rare 1.6pc budget surplus posted in first quarter of the year amid whopping State Bank of Pakistan profit and petroleum levy collection and the closure of hundreds of projects on the tight fiscal requirements of the IMF programme to shift focus on completion of strategic projects at advanced stages of development for their early completion.

Data released by the Ministry of Planning and Development on Wednesday showed that, excluding corporations, the total PSDP expenditure by about 35 ministries and divisions amounted to a meagre Rs54bn in the first four months, or about 8pc of the total allocation worth Rs682bn. The corporatisations — chiefly the power sector and the national highway authority — together spent Rs22bn or 6.9pc against their budget allocation of Rs318bn for the whole year. Power sector utilised only Rs1.9bn or just 2pc of Rs91bn allocation.

Under the mechanism announced by the Ministry of Finance for the current fiscal year, the government should release 15pc of budgeted allocation in first quarter, followed by 20pc in second quarter, 25pc in third quarter and remaining 40pc in the last quarter of the fiscal year to ensure that any shortfall in revenue collection is managed through cuts in development budget to remain with fiscal targets set with IMF.

Under this mechanism, the Planning Commission claimed that it had authorised Rs330.4bn for disbursement to the federal ministries in the first four months, which accounted for more than 33pc of the annual target (Rs1tr) and was higher than allowed in the finance ministry’s instructions, but only Rs76bn or 7.6pc could be actually spent on the ground.

Only seven ministries crossed the Rs1bn mark in the first four months, led by the Water Resources Division, which spent Rs13.56bn, or 10.5pc of its Rs129bn annual allocation. NHA utilised Rs20bn (8.8pc) against Rs227bn and HEC Rs5.2bn against Rs42bn (12.4pc).

Published in Dawn, November 13th, 2025