The federal government of Pakistan has cut the development budget to prevent an increase in petroleum product prices. A reduction of Rs. 100 billion has been made in the Public Sector Development Program (PSDP), lowering the total federal development budget from Rs. 1 trillion to Rs. 900 billion.
Federal Minister for Planning Ahsan Iqbal confirmed the decision, stating that a 10 percent cut has been applied across all development projects. The move aims to control inflation and maintain fuel prices for consumers.
Initially, the PSDP had been allocated Rs. 1,000 billion for the fiscal year 2025–26. Following the reduction, the revised development budget now stands at Rs. 900 billion. The decision was made in consultation with the Ministry of Finance and aligns with advice from the International Monetary Fund (IMF) to limit non-essential spending amid global economic pressures.
Officials noted that the utilization of the development budget has remained slow. During the first eight months of the current fiscal year, only Rs. 361 billion, or 36 percent of the total allocation, has been spent on federal development projects. This low expenditure has prompted the government to prioritize essential projects while reducing discretionary spending.
The government emphasized that priority infrastructure projects will continue despite the cut in the development budget. Non-critical projects may face delays until economic conditions improve. Experts say the reduction reflects the government’s strategy to balance fiscal responsibility with social and economic stability.
This adjustment in the development budget demonstrates Pakistan’s focus on controlling inflationary pressures while ensuring that vital development projects continue. The move is also seen as a proactive measure to prevent fuel price hikes and support economic stability during uncertain global conditions.
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By carefully managing the development budget, Pakistan aims to protect essential services while maintaining financial discipline and stability.
