ISLAMABAD:Marred by political considerations and fiscal constraints, the coalition government has proposed a Rs1 trillion Public Sector Development Programme (PSDP) for FY2025-26 – a significant cut from last year’s original Rs1.4 trillion allocation.
The reduced PSDP reflects the government’s prioritization of infrastructure projects, particularly roads, often aligned with coalition allies’ interests. In contrast, funding for education, health, space, and atomic energy programmes has been scaled back.
The previous year’s PSDP was trimmed mid-year to accommodate power subsidies and meeting IMF programme targets.
For 2025-26, allocations for Sindh-specific schemes and parliamentarians’ discretionary projects have increased, indicating a tilt toward politically strategic spending.
The PSDP 2025-26 book shows the government’s political priorities to appease allies and spend more on roads.
It approved reduced budgets for Pakistan’s space and atomic energy programmes, health and education but increased allocations for Sindh-specific projects and the parliamentarians’ schemes.
Major allocations have been proposed for the discretionary spending on the schemes recommended by the parliamentarians, Sindh-specific infrastructure projects and an enhanced allocation for the National Highway Authority.
The allocations for water, power and railways have been drastically reduced to create fiscal space for the politically oriented projects.
As against this year’s Rs25 billion budget for discretionary spending on the parliamentarians schemes, the allocation has been proposed at Rs70 billion in the new budget, showing an increase of 172% in the middle of the tight fiscal space.
The defence ministry’s development budget has also been increased by 114% to Rs11.6 billion for the new fiscal year.
For the provinces, special areas allocations have been proposed to be increased from Rs227 billion to over Rs253 billion due to coalition party-related spending compulsions.
Within this, the allocation for the provincial projects has been proposed to be increased from Rs83 billion to Rs106 billion.
The 28% increase in the provincial projects’ allocations has been mainly given to address the concerns of the Pakistan Peoples Party (PPP), said a cabinet minister on condition of anonymity.
