Govt cuts proposed development spending by Rs126 billion to clear path for June 12 budget

The federal government has reduced the proposed Public Sector Development Programme (PSDP) for the upcoming fiscal year by Rs126 billion.

While Punjab, Sindh and Khyber Pakhtunkhwa (KP) will also restrict their development expenditures to current levels, these adjustments aim to generate Rs500 billion in fiscal space for strategic initiatives.

According to reports, the ruling coalition partners, the Pakistan Peoples Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N), reached this agreement to advance the delayed budget approval process.

Parliamentary Affairs Minister Tariq Fazal Chaudhry stated that the summary to convene the budget session has been moved, with the budget presentation scheduled for Friday, June 12.

Planning Minister Ahsan Iqbal confirmed the reduction, noting that the Planning Ministry received a revised budget ceiling of Rs1 trillion from the Finance Ministry. This figure represents an 11.2 per cent cut from the Rs1.126 trillion originally approved by the Annual Plan Coordination Committee (APCC).

This reduction also marks the first time a federal PSDP has been cut prior to presentation before the National Economic Council (NEC). Prime Minister (PM) Shehbaz Sharif will chair the NEC meeting following four previous postponements intended to build stakeholder consensus.

Iqbal stated that the Rs1 trillion proposed PSDP will be presented to the NEC, adding that “no new development scheme will be included in the new fiscal year except for those projects proposed by the Ministry of Defence and Ministry of Interior”.

Regarding provincial budgets, Punjab is expected to lower its planned Rs1.45 trillion development budget by over Rs150 billion, while Sindh will reduce its proposed Rs816 billion development allocation. KP is expected to freeze its proposed Rs564 billion spending plan and Balochistan’s allocation stands at Rs308 billion, which is already Rs53 billion less than the current year.

It may be noted that the final budget requires IMF endorsement to ensure compliance with the designated fiscal stabilisation path.