Govt utilises only 41.5% of PSDP in nine months while parliamentarians’ pet schemes hit 70% spending in just four months
Key Takeaways:
- The federal government spent just Rs415 billion of its Rs1 trillion PSDP allocation in the first nine months of FY2025-26, reflecting deep structural inefficiencies in public development spending.
- The PSDP was further cut by Rs90 billion to fund fuel subsidies after petroleum prices spiked following US-Israeli strikes on Iran, yet even the revised targets went largely unmet.
- Parliamentarians’ SDG Achievement Programme schemes saw the fastest disbursement in the entire PSDP, with nearly 70% of funds spent in just four months, raising serious questions about spending priorities.
Islamabad, Pakistan – In a recent analysis, Dawn newspaper has reported that Pakistan’s government has spent less than half of its annual Public Sector Development Programme (PSDP) budget in the first nine months of the current fiscal year, even as funds earmarked for ruling parliamentarians’ constituency schemes were disbursed at a strikingly faster pace.
Only Rs115.5 billion was spent on development activities in Azad Kashmir and Gilgit-Baltistan, representing 46% of their annual allocation of Rs249.2 billion, which had itself already been trimmed by Rs25 billion to help cover fuel subsidies.
According to data compiled by the Ministry of Planning and Development, total PSDP utilisation from July to March stood at Rs415 billion, which represents only 41.5% of the Rs1 trillion originally allocated for the full fiscal year. While this marks a marginal improvement over the 36.4% utilisation recorded during the same period last year, the gap between targets and actual spending remains alarmingly wide.
The situation was further complicated when, towards the end of March, the government slashed PSDP allocations by Rs90 billion to finance fuel subsidies as petroleum prices surged in the aftermath of US-Israeli attacks on Iran. Even after accounting for this reduced envelope of Rs910 billion, actual utilisation climbed only slightly to 45.6%, leaving a shortfall of nearly Rs267 billion against the government’s own notified disbursement schedule.
Parliamentarians’ Schemes Outpace Everything Else
The starkest contrast in Pakistan’s development spending story lies in the Sustainable Development Goals (SDGs) Achievement Programme, commonly known as SAP, which funds projects chosen directly by parliamentarians in their constituencies. The Planning Commission authorised nearly 90% of SAP’s revised annual allocation of Rs63.24 billion, of which over Rs44 billion, approximately 70%, had already been spent by the end of nine months. What makes this figure remarkable is that the bulk of these funds were released and spent within just four months, making SAP the fastest-executing programme in the entire PSDP portfolio.
Critics and fiscal observers are likely to note that while critical infrastructure and public welfare projects continue to lag, politically motivated constituency spending appears to face none of the bureaucratic or financial bottlenecks that plague the broader development programme.
Even after accounting for this reduced envelope of Rs910 billion, actual utilisation climbed only slightly to 45.6%, leaving a shortfall of nearly Rs267 billion against the government’s own notified disbursement schedule.
Critical Sectors Fall Far Behind
The spending shortfall is distributed across nearly all major sectors. All 33 federal ministries combined utilised only Rs301 billion in the first three quarters, accounting for 48% of their revised allocation of Rs627 billion.
The National Highway Authority spent Rs73 billion against a revised budget of Rs201 billion, achieving only 36% utilisation, despite Pakistan’s widely acknowledged need for road infrastructure. The power sector managed 50% utilisation, spending Rs41.3 billion of its Rs81.68 billion allocation. Housing recorded particularly dismal performance, using just Rs1.9 billion of a Rs15 billion allocation, or only 13%.
National health services utilised a mere 28% of their Rs12.65 billion allocation, spending Rs3.6 billion, while the information technology division spent only Rs4 billion against a Rs20 billion annual target, showing 20% progress at the nine-month mark. The water sector, critically important given Pakistan’s growing water scarcity, used only 44% of its revised Rs116 billion allocation.
Among the relatively better performers, higher education and the federal education division both achieved around 55% utilisation.
Azad Kashmir and Gilgit-Baltistan Also Shortchanged
Development spending in Pakistan’s special regions also fell short. Only Rs115.5 billion was spent on development activities in Azad Kashmir and Gilgit-Baltistan, representing 46% of their annual allocation of Rs249.2 billion, which had itself already been trimmed by Rs25 billion to help cover fuel subsidies.
IMF Targets Add Pressure
Under the release mechanism announced by the Ministry of Finance at the start of this fiscal year, the government had committed to releasing 15% of PSDP funds in the first quarter, 20% in the second, 25% in the third and 40% in the final quarter. This phasing was tied to fiscal consolidation targets agreed with the International Monetary Fund (IMF). Against this schedule, PSDP spending should have reached at least Rs682 billion under the revised allocation by the nine-month mark, making the actual shortfall nearly Rs267 billion.
The power sector managed 50% utilisation, spending Rs41.3 billion of its Rs81.68 billion allocation. Housing recorded particularly dismal performance, using just Rs1.9 billion of a Rs15 billion allocation, or only 13%.
Even the Planning Commission’s own authorisation levels, at 64.6% of the revised PSDP, fell well short of the notified 75% target, indicating the problem is embedded at multiple levels of the planning and release machinery.
The PSDP portfolio also includes 86 foreign-funded projects with a total value of Rs4.2 trillion, with a rupee cover of Rs229 billion allocated for FY26.
