Punjab takes biggest hit as NEC slashes development budget by Rs1.04tr

The National Economic Council (NEC) has slashed the country’s total development budget by one-fourth, bringing it down to Rs3.218 trillion for the 2026-27 fiscal year, a sharp drop from the Rs4.264 trillion initially cleared by the Annual Plan Coordination Committee (APCC).

Under the new plan, provincial development programs have been frozen at their actual spending levels from the current year. The combined Annual Development Plans (ADPs) of the four provinces took a 29.3 percent cut, dropping to Rs2.218 trillion from the Rs3.138 trillion proposed by the APCC on June 1.

Punjab faces the most severe reduction. The province’s development budget was cut by 49 percent, dropping from the APCC-approved Rs1.455 trillion down to Rs749 billion. Planning Minister Ahsan Iqbal stated that Punjab Chief Minister (CM) Maryam Nawaz, who could not attend the meeting due to a recent surgery, authorized this downward revision.

The budget freeze was settled between the ruling coalition partners, the PML-N and the PPP, before the official NEC and budget schedules were finalized. To ensure political face-saving for the provinces, the federal government lowered its own Public Sector Development Programme (PSDP) by 11 percent, reducing it to Rs1 trillion from the APCC’s recommended Rs1.126 trillion. Ahsan Iqbal noted that provincial leadership concrete arguments showed they could not defend their own cuts if the federal budget remained untouched.

Other provinces saw varying degrees of impact. The PPP minimized the budget reduction for Sindh, containing the ADP at Rs706 billion, which is a 13.5 percent drop from the Rs816 billion proposed last week.

Meanwhile, Khyber Pakhtunkhwa (KP) Chief Minister Sohail Afridi agreed to a revised ADP of Rs455 billion. This matches the province’s current budgeted amount but falls short of the Rs564 billion initially cleared by the APCC.

Balochistan was the only province to avoid cuts entirely, retaining its Rs308 billion development layout, which stands roughly Rs29 billion higher than its current fiscal year allocation.

According to the reports, this shifting of funds allows the government to repurpose Rs800 billion to Rs900 billion for strategic areas like national security and water resources.

Ahsan Iqbal confirmed that the upcoming development program will include “no new project except for the ministries of interior and defence”. He added that the actual scale of these savings remains dependent on multiple variables, including real tax collections and how the funds eventually become available.