The federal government has decided to increase the size of the Public Sector Development Programme (PSDP) for fiscal year 2026-27. The move matters because it signals higher development spending despite fiscal constraints. Provinces, infrastructure projects, and development initiatives are expected to benefit from the proposed increase.
According to official sources, the government has proposed raising the PSDP allocation from Rs1.126 trillion to Rs1.320 trillion. The increase would add nearly Rs200 billion to the federal development budget compared to the current fiscal year. The enhanced allocation is aimed at accelerating development projects and supporting economic growth.
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Sources said additional funds have also been earmarked for projects in Sindh and initiatives linked to the Sustainable Development Goals (SDGs). The proposed allocations were discussed during key consultations between the federal government and the Pakistan Peoples Party (PPP) regarding the upcoming budget and development priorities.
The discussions included senior PPP leaders such as Naveed Qamar, Sherry Rehman and Murad Ali Shah, who participated via video link. Sources indicated that several demands put forward by the PPP received positive consideration during the negotiations.
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Officials said Prime Minister Shehbaz Sharif had directed authorities to increase the PSDP by Rs200 billion. The government has also reportedly reached an understanding with the International Monetary Fund on the proposed expansion after creating the required fiscal space. Several agreed measures are expected to be reflected before the federal budget is formally presented.