The financial year 2025-26 marks a defining period in Punjab’s public finance management, reflecting a shift from conventional budgeting toward results-oriented governance, fiscal discipline and accelerated development spending. Under Chief Minister Maryam Nawaz, the provincial government pursued efficient budget utilisation, enhanced revenue mobilisation, prudent expenditure management and institutional reforms to strengthen financial governance while expanding public investment at an unprecedented scale.
With a record outlay of Rs5.335 trillion, Punjab presented the largest provincial budget in its history. The budget also signalled a shift in priorities by allocating an unprecedented Rs1.24 trillion to the Annual Development Programme (ADP) – a 47 per cent increase over the previous year’s Rs842 billion – underscoring the government’s commitment to capital formation, infrastructure modernisation and long-term economic growth.
The year also reinforced Punjab’s focus on development-led growth, with large-scale investment in education, health, infrastructure, housing, transport and social welfare designed to generate multiplier effects across the provincial economy and strengthen human capital.
The ADP was the centrepiece of Punjab’s fiscal strategy. Official development documents show the Rs1.24 trillion portfolio covered around 2,750 ongoing and new schemes, split into roughly Rs536 billion for ongoing schemes, close to Rs471 billion for new initiatives and a further Rs233 billion in block allocations for special programmes, including the Chief Minister’s Local Roads Programme for underserved districts. Transport and road infrastructure overall received over Rs335 billion, reflecting the priority placed on connectivity. The social sectors – education, health and social protection – together accounted for nearly Rs494 billion, about 40 per cent of the ADP, with education’s development allocation alone close to Rs148.5 billion. Major investments also went to climate resilience, urban development, digital governance and agriculture modernisation.
A notable feature was the focus on budget utilisation and expenditure efficiency, an area where development budgets across jurisdictions often struggle with low absorption and delayed implementation. During FY 2025-26, the Planning and Development Board stepped up monitoring, with the Provincial Development Working Party convening far more frequently to accelerate scheme approvals. By the Board’s mid-year review, releases against ongoing ADP schemes had reached roughly Rs536 billion of the Rs1.24 trillion programme, even as its leadership pressed line departments to translate releases into faster utilisation on the ground. Greater inter-departmental coordination and digitised monitoring helped align allocations with actual spending.
Fiscal management also reflected strong discipline. Despite higher development spending, the government maintained controls in non-development sectors, including a steep, roughly 94 per cent cut in domestic borrowing and an 88 per cent reduction in Account-II (Food) expenditure compared with the previous year. The province also built an Estimated Provincial Surplus of around Rs470 billion into its fiscal framework – linked to the Federal Board of Revenue meeting its national collection target under Punjab’s understanding with the IMF – supporting broader macroeconomic stabilisation.
Revenue mobilisation remained another key pillar. Of Punjab’s projected revenue of about Rs4,890.4 billion, roughly Rs4,062.2 billion was expected through the federal divisible pool under the NFC Award, while the province set its own receipts target at Rs828.2 billion. Rather than new taxes, the government pursued a pro-business, zero-new-tax approach focused on expanding the tax base, improving documentation, and enhancing collection efficiency, including through property valuation reforms – improving revenue buoyancy without raising the burden on households and businesses.
Punjab Revenue Authority was assigned a collection target of Rs340 billion, the Board of Revenue Rs135.5 billion and the Excise, Taxation and Narcotics Control Department Rs70 billion. Digitisation of tax administration, improved enforcement, data-driven audits and taxpayers’ facilitation initiatives strengthened revenue administration, contributing to greater transparency and reduced leakage.
FY 2025-26 also saw further consolidation of modern public financial management, with greater emphasis on performance-based budgeting, evidence-driven decision-making and digital financial systems. Institutional reforms extended to local government empowerment, with a Provincial Finance Commission award of Rs764.2 billion transferred to local bodies, alongside dedicated allocations for waste management, municipal services and a Rs70 billion social protection package for impecunious strata- reinforcing the Punjab government’s emphasis on treating public funds as a trust to be managed with accountability.
The year also reinforced Punjab’s focus on development-led growth, with large-scale investment in education, health, including new cardiology institutes such as the Nawaz Sharif Institute of Cardiology in Sargodha, infrastructure, housing, transport and social welfare designed to generate multiplier effects across the provincial economy and strengthen human capital.
Overall, FY 2025-26 stands as a significant milestone in Punjab’s fiscal evolution: record development spending, a more diversified ADP, stronger financial governance, enhanced revenue administration and renewed fiscal discipline together produced a more resilient, performance-oriented public finance framework. While challenges remain, Punjab’s trajectory – guided by Chief Minister Maryam Nawaz’s continued emphasis on transparency, accountability and prudent stewardship – reflects a determined effort to balance development ambitions with sound financial management, laying a stronger foundation for future growth and service delivery.
The writer is a Lahore-based public policy analyst and can be reached at [email protected].