Development spending under the federal Public Sector Development Programme (PSDP) remained weak during the first five months of the current fiscal year, with utilisation reaching only 9.2 per cent of the annual allocation. The slowdown reflects fiscal rationing as the government works to meet contingency measures agreed with the International Monetary Fund (IMF).
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According to the Ministry of Planning and Development’s Monthly Development Outlook for December 2025, Rs92 billion was spent against Rs196bn sanctioned for July to November. This was 20 per cent lower than spending recorded in the same period last year.
The ministry attributed the decline mainly to reduced expenditure by provinces, special areas and the Ministry of Railways. Foreign-funded projects, however, showed relatively better utilisation, with Rs12.8bn spent out of Rs25.1bn sanctioned.
The government has committed to contingency measures under the IMF programme following a revenue shortfall of Rs430bn in the first five months. If revenue gaps persist, the government may raise federal excise duties on fertilisers and pesticides and widen the sales tax base.
Sector-wise data showed that infrastructure, which received 63pc of the total PSDP allocation, recorded limited utilisation. The energy sector spent less than 3pc of its allocation, while physical planning and housing used under 10pc.
The health and nutrition sector showed the weakest performance, utilising only 1.25pc of its allocation in five months. Education spending was relatively higher, with over Rs12bn utilised against allocations for the sector.
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Despite the low utilisation, the government reported a budget surplus in the first quarter due to strong State Bank profits and petroleum levy collections. Authorities have also moved to close slower projects to focus resources on fast-moving and strategically important schemes.
Officials said 313 projects are expected to be completed this fiscal year as efforts continue to improve execution and prioritisation. The ministry expressed optimism about the economic outlook, citing improving fiscal management, easing inflation and resilient remittance inflows.