ISLAMABAD – The federal government is reportedly considering a Rs300 billion reduction in the Public Sector Development Programme (PSDP) for the current fiscal year, slashing the national development budget by nearly 30 percent, from Rs1,000 billion to Rs700 billion.
Sources in the Planning Commission revealed that the proposed cut is being weighed due to lower-than-expected revenue collection and the government’s efforts to maintain the primary balance target under its fiscal consolidation strategy.
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Officials warned that the move could impact key national projects, particularly those related to infrastructure and public development, as funding allocations may be curtailed across multiple sectors.
Initially, the government had earmarked Rs1,400 billion for the PSDP in the ongoing fiscal year, but fiscal constraints have already reduced it to Rs1,000 billion, with the latest proposal suggesting an additional Rs300 billion cut.
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During the previous fiscal year, Rs1,096 billion was spent on development projects. If the new proposal is approved, the PSDP expenditure could drop to Rs700 billion, reflecting a significant slowdown in federal development spending. Economic experts caution that such reductions may hamper growth, delay infrastructure projects, and reduce employment opportunities tied to public investment.