The Sindh government is likely to reduce the allocation for foreign-funded development projects in the upcoming FY2026-27 budget, while significantly increasing proposed schemes under the federal Public Sector Development Programme (PSDP), according to initial budget proposals and official estimates.
Sources said the first draft of the provincial budget for FY2026-27 has been prepared, indicating a major shift in development financing priorities.
Under the proposed framework, allocations for Foreign Project Assistance (FPA) are expected to decline by around Rs70 billion compared to the current fiscal year, while Sindh is likely to propose nearly 100 percent higher PSDP-funded schemes to the federal government.
For the outgoing fiscal year ending June 30, the total size of Sindh’s development portfolio stood at Rs1.018 trillion. This included Rs520 billion for the Annual Development Programme (ADP), Rs366 billion for foreign-funded projects, Rs76 billion under PSDP, and Rs55 billion for district ADP schemes.
Officials said the provincial government is considering reducing the foreign-funded projects allocation to below Rs300 billion in FY2026-27. In contrast, Sindh is expected to propose development schemes worth around Rs150 billion to the federal government under PSDP, compared to Rs76 billion in the current fiscal year.
According to officials familiar with the planning process, several major foreign-assisted projects are being completed during the current fiscal year, contributing to the reduced FPA allocation for next year.
These include the World Bank-assisted Competitive and Livable City of Karachi (CLICK) project, Karachi Water and Sewerage Services Improvement Project, the Rs150 billion Sindh Flood Emergency Rehabilitation Phase-I programme, a solar energy project, and the Child Healthcare Unit project funded through a JICA grant.
Officials said the provincial government plans to continue work on a number of externally financed projects in the next fiscal year, including the $180 million Coastal Resilience Project, Inclusive Development Project, and STAR-WASH initiative.
Available financial data shows that the Sindh government had spent approximately Rs265 billion on foreign-funded projects by April 30 of the current fiscal year.
Budget consultations and final allocations are expected to continue over the coming weeks before the provincial budget is formally presented.