ISLAMABAD: Development spending under the federal Public Sector Development Programme (PSDP) remained sharply constrained during the first five months of the current fiscal year, with only 9.2 per cent of the annual allocation utilised amid government efforts to manage a growing revenue shortfall under commitments made to the International Monetary Fund (IMF).
According to the Ministry of Planning and Development’s Monthly Development Outlook for December 2025, Rs92 billion was spent between July and November against a sanctioned amount of Rs196bn for the period, out of a total PSDP allocation of Rs1 trillion. The ministry noted that development expenditure remained “modest”, with spending largely concentrated in infrastructure projects.
The utilisation during the five-month period was about 20 per cent lower than the Rs115bn spent in the same period last year. The slowdown was attributed mainly to reduced spending by provinces, special areas and the Ministry of Railways. In contrast, foreign-funded projects recorded relatively better performance, with Rs12.8bn spent out of Rs25.1bn sanctioned.
The restrained pace of spending comes as the government seeks to adhere to contingency measures agreed with the IMF following a recent $1.2bn disbursement, after a cumulative revenue shortfall of around Rs430bn emerged during the first five months. Under the agreement, the government has committed to potential tax measures — including higher federal excise duties on fertilisers and pesticides and the withdrawal of selected sales tax exemptions — if revenue performance fails to improve.
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Sector-wise data showed uneven utilisation across the development portfolio. The infrastructure sector, which received 63pc of the PSDP allocation at Rs626.8bn, recorded spending of Rs55.2bn by November 30. Within this, transport and communication absorbed the largest share, with Rs30.4bn spent against an allocation of Rs333.5bn.
The water sector, with an allocation of Rs98bn, reported an expenditure of Rs14.281bn (14.6pc) in five months.https://t.co/WvIFHLsmHM
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Spending remained particularly low in the energy sector, which utilised Rs3.52bn — less than 3pc — against an allocation of Rs122.7bn. The physical planning and housing sector spent Rs7bn out of Rs72.7bn, while the water sector utilised Rs14.3bn, or 14.6pc, of its Rs98bn allocation.
The social sector showed relatively better utilisation, though overall spending remained limited. Education, including higher education, spent Rs12.3bn against an allocation of Rs60.8bn. Health and nutrition recorded the weakest performance, with only Rs211m utilised out of Rs16.8bn, representing just 1.25pc in five months.
The report noted that the PSDP portfolio includes 86 foreign-funded projects with a total foreign cost of Rs4.2 trillion. A recent review indicated that 313 projects are expected to be completed during the current fiscal year. Despite the slow start, the ministry expressed optimism, citing improved fiscal management, easing inflation and steady remittance inflows as supportive factors for the country’s development outlook.
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