Pakistan Uplift Spending Hits Just Half of FY26 Budget in 11 Months

ISLAMABAD: Pakistan’s federal development programme remained sharply underused during the first 11 months of FY26, with official figures showing that only about half of the original uplift budget had actually been spent despite major public infrastructure and welfare needs across the country.

The Public Sector Development Programme, commonly known as the PSDP, recorded utilisation of Rs529.8 billion from July 2025 to May 2026 against the original allocation of Rs1.01 trillion. The pace of spending was weaker than the same period last year, when expenditure had reached Rs596 billion from a larger Rs1.1 trillion development envelope.

The slowdown came after the government reduced development allocations by Rs173 billion during the fiscal year to make room for fuel subsidies following a surge in oil prices linked to conflict in the Middle East. After the reduction, the PSDP envelope fell to around Rs837 billion, making the spending ratio appear stronger against the revised target but still weak compared with the original budget.

Planning Ministry data showed that almost the full revised allocation had been authorised by the end of May, but actual use of funds remained far lower because executing agencies struggled to convert approvals into completed spending. The Finance Ministry’s quarterly release framework had expected a much faster pace, with the bulk of development money scheduled for release before the close of the fiscal year.

A striking contrast appeared in spending patterns. Parliamentarians’ development schemes under the SDGs Achievement Programme moved quickly after delayed releases began, while special regions including Azad Kashmir and Gilgit-Baltistan saw slower execution and reduced allocations as funds were redirected to fuel-related support.

The figures point to a familiar weakness in Pakistan’s public investment system: money is often authorised late, agencies face capacity constraints, and large projects can be delayed by procurement, approvals, cash availability and administrative bottlenecks. This means budget announcements frequently look more ambitious than actual development delivery on the ground.

Sector-wise utilisation also varied widely. Higher education and federal education performed better than several other areas, while health services and information technology recorded notably weak spending rates. Infrastructure spending was mixed, with the National Highway Authority using less than half of its revised allocation while the power sector showed stronger execution.

The underuse of the uplift budget matters because development spending is directly linked to jobs, roads, water projects, education facilities, health services and long-term productivity. When capital expenditure is delayed or cut, short-term fiscal targets may improve, but the economic cost can appear later in slower growth and weaker public service delivery.

Pakistan is already trying to balance IMF-linked fiscal discipline with rising pressure for relief, provincial spending commitments and demands for better infrastructure. The coming weeks will show whether the government can accelerate utilisation before the fiscal year closes or whether FY26 will end with another large gap between planned development priorities and money actually spent.