Public Sector Development Spending Plummets Despite Budget Surplus

ISLAMABAD: The Public Sector Development Programme (PSDP) spending in Pakistan has significantly stalled, reaching only 10.4% of the annual allocation in the first four months of the current fiscal year, according to the Ministry of Planning and Development.

Total PSDP expenditure from July to October 2026-27 amounted to Rs103.87 billion, a stark contrast to the Rs1 trillion allocated for the year. This underutilization is alarming, especially given that the Planning Commission authorized Rs412.3 billion for this period. Excluding corporations, the spending by 33 ministries and divisions totaled a mere Rs74.65 billion, or about 11% of their Rs682 billion allocation, while corporations like the power sector and the National Highways Authority spent Rs29 billion, or 9.3% of their Rs313 billion budget.

This troubling trend in public spending is impacting living standards and economic growth, raising concerns among citizens and policymakers alike. Despite a reported budget surplus of 0.8% in the first quarter, the low utilization of funds for public-interest projects suggests a disconnect between fiscal health and effective governance.

As the government faces mounting pressure to enhance development spending, upcoming meetings among key stakeholders are anticipated to address these challenges and strategize on improving fund utilization for critical infrastructure and social projects.