ISLAMABAD: Prime Minister Shehbaz Sharif has directed economic authorities to increase the proposed federal Public Sector Development Programme (PSDP) allocation for the fiscal year 2026-27 by Rs200 billion, signalling the government’s intention to boost spending on development projects despite fiscal constraints.
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According to sources, the prime minister considered the proposed PSDP allocation of Rs1.126 trillion inadequate for meeting the country’s development needs and instructed the Ministry of Finance and the Ministry of Planning to explore ways to arrange additional funds.
The directive came shortly after Planning Minister Ahsan Iqbal announced that the Finance Ministry had earmarked Rs1.126 trillion for the federal development programme in the upcoming fiscal year. Following the prime minister’s intervention, the federal PSDP is now expected to rise to Rs1.326 trillion.
The issue is likely to be discussed at the National Economic Council (NEC) meeting scheduled for June 3. The NEC, Pakistan’s highest economic policy-making forum, is expected to review the overall national development outlay for FY27.
Sources said the total proposed national development budget stands at Rs4.464 trillion, comprising Rs1.326 trillion for the federal PSDP and Rs3.138 trillion for provincial development programmes.
The government is also expected to brief the International Monetary Fund (IMF) regarding the proposed increase in development spending. At the same time, the prime minister has asked the Ministry of Finance and the Federal Board of Revenue (FBR) to identify measures that could generate an additional Rs200 billion in revenue.
However, officials reportedly expressed concerns over raising the tax collection target beyond the proposed Rs15.264 trillion and are examining alternative options to create fiscal space.
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Provincial development allocations under consideration include Rs1.45 trillion for Punjab, Rs816 billion for Sindh, Rs564 billion for Khyber Pakhtunkhwa and Rs308 billion for Balochistan.
The NEC meeting will be attended by provincial chief ministers, finance ministers and representatives from Azad Jammu and Kashmir before final budget proposals are presented for approval.