• PSDP utilisation from July 2025 to May 2026 stands at Rs529.8bn, against Rs1.01tr allocation
• Govt cuts development outlay by Rs173bn to finance fuel subsidies after Mideast conflict pushed up oil prices
• Only Rs153.86bn spent on uplift activities in special regions
ISLAMABAD: Amid a 17 per cent cut in allocations during the outgoing fiscal year, the government and its agencies struggled to implement the Public Sector Development Programme (PSDP), utilising only about half of the budget earmarked for public welfare projects during the first 11 months of FY26.
According to the Ministry of Planning and Development, total PSDP utilisation amounted to Rs529.8bn during the first 11 months of the year, accounting for 52.4pc of the original allocation of Rs1.01 trillion. The utilisation was slightly lower than the 54pc recorded during the same period last year, when PSDP expenditure stood at Rs596bn against an allocation of Rs1.1tr.
In the aftermath of the US-Israel attack on Iran, the government slashed PSDP allocations by Rs173bn to provide fuel subsidies as petroleum prices surged. As a result, the actual utilisation improved to 63pc of the reduced envelope of Rs837bn.
The government started bulk disbursements to parliamentarians’ schemes, codenamed the Sustainable Development Goals (SDGs) Achievement Programme (SAP), after the first five months of the fiscal year and disbursed about 70pc (Rs44bn) before the close of the third quarter.
As of the end of May, the Planning Commission had authorised almost 100pc (Rs63.236bn) of the revised annual allocation, but actual utilisation remained stuck at Rs44bn, or 70pc of the budget. Interestingly, these funds were authorised and spent within a short span of around four months, making it the fastest-executed programme.
As of May 31 this year, ministries and divisions had sanctioned disbursements of Rs835.6bn, almost the entire revised allocation of Rs837.16bn, against which actual expenditure of Rs529.8bn, or 52pc of the original allocation, had been reported. The annual PSDP allocation in the budget for 2025-26 originally amounted to Rs1.01tr. Compared to the relatively healthy spending on parliamentarians’ schemes, disbursements to special regions, including Azad Kashmir and Gilgit-Baltistan, struggled. Only Rs153.86bn was spent on development activities in these areas, accounting for 62pc of their annual allocation of Rs249.2bn. Funding for these special areas had already been cut by Rs52bn to finance fuel subsidies.
Utilisation remained well behind the disbursement schedule approved by the government and lower than last year’s performance. PSDP expenditure during the first 11 months of the previous fiscal year amounted to Rs596bn, accounting for 54pc of the Rs1.1tr allocation.
Under the mechanism announced by the Ministry of Finance for the current fiscal year, the government was required to release 15pc of the budgeted allocation in the first quarter, followed by 20pc in the second quarter, 25pc in the third quarter and the remaining 40pc in the last quarter of the fiscal year.
The objective was to ensure that any shortfall in revenue collection could be managed through cuts in development spending while remaining within fiscal targets agreed with the IMF. Under this release mechanism, PSDP spending should have crossed at least Rs878bn, or 87pc of the original allocation. Even under the reduced PSDP envelope of Rs837bn, utilisation should have reached Rs730bn.
