The government is considering a significant cut of Rs. 300 billion in the Development Budget for the current fiscal year, according to sources in the Planning Commission. The move comes as the authorities struggle to meet revenue targets and maintain the country’s primary balance goal.
Officials say the proposed reduction is being discussed due to a shortfall in revenue collection. The Ministry of Finance has reportedly advised the Planning Commission to limit development spending to manage fiscal pressures.
If the proposal is approved, the Development Budget will be reduced by about 30%. This would bring the Public Sector Development Programme (PSDP) below Rs. 1 trillion, possibly around Rs. 700 billion. The government had originally set aside Rs. 1.4 trillion for development spending in the current financial year.
The proposed cut means that development spending will be nearly Rs. 400 billion less than the Rs. 1.096 trillion spent last fiscal year. Experts believe this reduction could slow down the progress of several ongoing infrastructure and social welfare projects. Key sectors such as energy, transportation, and education are expected to be affected by the reduced funding.
Officials defending the move argue that controlling expenditure is necessary to stabilize public finances. They maintain that fiscal discipline must be prioritized to ensure macroeconomic stability. However, economists warn that slashing the Development Budget could impact job creation and delay critical public projects that support long-term growth.
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The final decision on the revised Development Budget will likely be made after further consultations between the Finance Division and the Planning Commission. For now, the government faces a difficult balance — managing fiscal constraints while trying to sustain development momentum across the country.
