ISLAMABAD: At a time when Pakistan’s economy is struggling to regain momentum, development spending has remained sluggish, with allocations reaching only 56 per cent and actual utilisation falling short by around 18pc during the first 10 months of the current fiscal year.

The utilisation under the Public Sector Development Programme (PSDP) reached 56pc despite a downward revision in the overall development outlay due to fiscal pressures, according to the Monthly Development Update (May 2026) released on Wednesday.

Actual spending under the PSDP amounted to Rs469.9bn during 10MFY26 against releases of Rs571.2bn, indicating a significant shortfall of 18pc in utilisation during the period.

The government has also scaled down the overall development outlay to Rs837.2bn from the originally projected Rs1,010bn for FY26, reflecting a cut of Rs172.8bn amid fiscal constraints. The ongoing conflict in the Middle East, along with prevailing fiscal pressures, has led to the adoption of several austerity measures, including the reduction in PSDP 2025-26 by Rs172.8bn.

Overall development outlay cut to Rs837.2bn from Rs1.01tr due to fiscal constraints

The utilisation was slightly higher than 41.96pc in the same period last year, when PSDP expenditure amounted to Rs448.6bn against an allocation of Rs1.096 trillion.

The government accelerated disbursements for parliamentarians’ development schemes under the Sustainable Development Goals (SDGs) Achievement Programme (SAP) after the first five months of the fiscal year.

During the 10-month period, the Planning Commission authorised nearly 70pc, or Rs44bn, of the revised annual allocation of Rs63bn, with nearly the entire amount already spent. The bulk of these funds was released and utilised within a short span of about five months, making it one of the fastest-executed development programmes.

As of April 30, ministries and divisions had sanctioned Rs571.2bn, against which Rs469.9bn (82pc of the actual allocation) had been spent. The annual PSDP allocation for 2025-26 stood at Rs1tr.

The planning ministry released only Rs16.8bn for the merged districts, erstwhile Fata, in 10MFY26 against the annual revised allocation of Rs54.3bn. The utilisation of development funds for the tribal areas stood at 31pc.

In contrast to the relatively strong spending on parliamentarians’ schemes, disbursements to special regions — including Azad Jammu and Kashmir and Gilgit-Baltistan — remained weak. Only Rs60.4bn was spent on development activities in these areas, accounting for 89pc of the annual revised allocation of Rs67.7bn.

Overall utilisation remained much behind the disbursement schedule approved by the government, though slightly higher than last year.

Published in Dawn, May 14th, 2026