Development spending under Pakistan’s Public Sector Development Programme reached ₨469.9 billion during the first 10 months of fiscal year 2025-26, although utilisation remained below official targets despite reductions in the overall development budget. Officials said ongoing fiscal pressures and regional tensions continued affecting the pace of public sector development projects.
According to the Monthly Development Update for May 2026, PSDP utilisation stood at 56% during the July-April period of FY26. The report showed ministries and divisions received total releases of ₨571.2 billion, while actual spending remained lower at ₨469.9 billion, reflecting an overall utilisation shortfall of nearly 18%.
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Meanwhile, the government revised down the total PSDP allocation for FY26 from ₨1.01 trillion to ₨837.2 billion, reducing the development outlay by ₨172.8 billion. Officials linked the decision to austerity measures, economic challenges and uncertainties caused by continuing tensions and conflict in the Middle East region.
Despite the reduced allocation, overall development spending remained slightly higher compared to the same period last year. During the corresponding period of FY25, PSDP expenditure stood at ₨448.6 billion against a significantly larger allocation of ₨1.096 trillion, indicating relatively improved spending efficiency under tighter fiscal conditions.
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The report also highlighted faster spending under parliamentarians’ development schemes through the Sustainable Development Goals Achievement Programme. During the first 10 months of FY26, the Planning Commission authorised around ₨44 billion, nearly 70% of the revised annual allocation of ₨63 billion, with most funds already utilised within a short period.
In contrast, development spending in merged districts of the former Fata region remained slow, with only ₨16.8 billion released against a revised allocation of ₨54.3 billion, resulting in utilisation of around 31%. However, development expenditure in Azad Jammu and Kashmir and Gilgit-Baltistan reached ₨60.4 billion, representing nearly 89% of the revised allocation for both regions.