ISLAMABAD: Pakistan’s Minister for Planning, Development, and Special Initiatives Ahsan Iqbal on Monday said that with only PKR 880 billion allocated for development in the upcoming 2025–26 federal budget, the government will need to prioritise high-impact and strategically important projects.
Pakistan has implemented austerity measures in the upcoming budget, scheduled to be announced on June 10, in accordance with the International Monetary Fund’s (IMF) conditions under its $7 billion loan programme.
These measures aim to tighten public spending and boost revenue collection to reduce the fiscal deficit and enhance debt sustainability.
As part of its outlook, the IMF projects Pakistan’s economy to grow by 3.6% next year, with inflation expected to average around 7.7%.
The minister, talking to reporters after a meeting of the Annual Plan Coordination Committee, said that since 2023, the development budget had decreased.
“Pakistan has faced such severe inflation that the federal government would end up spending the money it collected from the provincial governments to pay off loans,” he explained.
“The reason we have these debts is because the government in power between 2018 and 2022 took multiple loans, and the policy rate rose to 23pc due to heavy inflation,” Iqbal added.
“Repaying those loans became 55pc of our spending. As a result, this has affected our development budget.”
“Since resources are limited, we need to focus on high-priority projects for national development. We need to ensure ‘value for money’ in selecting projects.
He stated that the upcoming Public Sector Development Programme (PSDP) will allocate fiscal space for projects of strategic importance.
He emphasised that the development budget has been carefully aligned with national priorities, despite limited financial resources.
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Providing a breakdown of the new development budget, he said PKR 664 billion will be dedicated to infrastructure projects, including those related to energy, water, transport, and planning.
“The energy, water, and highway sectors will be prioritised,” he noted.
He said that Prime Minister Shehbaz Sharif had ordered that PKR 120bn of the development budget be allocated to upgrade the N-25 Highway in Balochistan, which runs from Chaman to Karachi through Quetta.
The minister further said that special areas such as Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan would receive PKR 63bn, while the merged districts in Khyber-Pakhtunkhwa would receive PKR 70bn.
“Science and IT (Information Technology) will receive PKR 53bn, bodies performing institutional reform will get PKR 9bn, while the production sector will receive PKR 1bn,” he outlined.
“Our guiding principle was to make sure that we prioritise projects for which we have rupee cover and foreign funding available,” Iqbal explained. “Those projects of national importance are protected. At the same time, projects in their advanced stages will also receive funding to achieve completion.
“Remittances reached $27bn in 2022-23 and can reach $37bn in 2024-25 — an increase of $10bn,” he said. “I want to thank overseas Pakistanis for ignoring negative calls and claims that ‘overseas Pakistanis are upset’ and calls for boycotts and continuing to send remittances.
“It is a very big contribution and it is like oxygen to us,” he added, stating that there is scope for remittance figures to climb to $50bn in the future.
