Pakistan’s public sector development spending remained significantly below the annual target during the first four months of the current fiscal year, with federal ministries and divisions utilising only Rs103.87 billion between July and October 2026. The expenditure represents just 10.4% of the Rs1 trillion allocation under the Public Sector Development Programme (PSDP) for FY2026-27, according to the latest figures released by the Ministry of Planning and Development. The actual utilisation was considerably lower than the Rs412.3 billion authorised by the Planning Commission for development activities during the period. The slow pace of spending has raised concerns about the implementation of public infrastructure and social development projects, particularly as development expenditure plays an important role in supporting economic activity, improving public services and creating employment opportunities. The spending shortfall has also emerged despite Pakistan recording a budget surplus equivalent to 0.8% of gross domestic product during the first quarter of the fiscal year.
Excluding corporations, approximately 33 federal ministries and divisions collectively spent Rs74.65 billion during the four-month period, representing around 11% of their combined annual allocation of Rs682 billion. Corporations, mainly operating in the power sector and through the National Highways Authority (NHA), utilised another Rs29 billion, equivalent to 9.3% of their annual allocation of Rs313 billion. The NHA recorded particularly slow progress, spending only Rs13.3 billion, or 5.8% of its Rs225 billion annual development allocation. In comparison, the power sector utilised Rs16 billion, representing approximately 18% of its Rs98 billion allocation. The Planning Commission had authorised Rs78.6 billion for the NHA and Rs31 billion for the power sector, indicating a considerable difference between the amounts approved for disbursement and the funds actually utilised by these entities. The limited expenditure raises questions about the pace of project execution, administrative processing and the ability of implementing agencies to translate approved development funds into completed infrastructure work.
The federal government’s development spending mechanism for the current fiscal year requires the release of 15% of the annual allocation during the first quarter, followed by 20% in the second quarter, 25% in the third quarter and the remaining amount in the final quarter. The Ministry of Finance introduced this quarterly release arrangement to maintain fiscal discipline and manage potential revenue shortfalls through adjustments to development expenditure, ensuring that the government remains within the fiscal targets agreed with the International Monetary Fund (IMF). Under this arrangement, the Planning Commission stated that it had authorised Rs303 billion for federal ministries during the first four months, representing more than 44% of the annual Rs1 trillion development allocation. Despite the availability of authorised funding, actual expenditure by ministries remained around Rs75 billion, equivalent to approximately 11% of their annual allocation. This gap highlights the difference between the government’s ability to approve development funds and the capacity of departments to utilise them for projects within the allocated period.
Among federal ministries, only eight managed to cross the Rs1 billion spending threshold during the first four months of FY2026-27. The Water Resources Division recorded the highest expenditure, utilising Rs18.7 billion, or 18% of its annual allocation of Rs103 billion. The Federal Education and Professional Training Division spent Rs6.88 billion against its Rs36 billion allocation, representing approximately 19% utilisation. The National Health Services, Regulations and Coordination Division recorded expenditure of Rs6.6 billion, achieving a significantly higher utilisation rate of 41% against its annual allocation of Rs16 billion. The health division also exceeded its utilisation target when compared with the Rs9.6 billion authorised for the period. Meanwhile, the Higher Education Commission utilised Rs4.7 billion, equivalent to 10% of its Rs46 billion annual allocation, while the Ministry of Railways spent Rs4.65 billion against its Rs40.65 billion allocation, representing approximately 11%. The Ministry of Planning and Development itself utilised only Rs2.15 billion, less than 10% of its Rs22.6 billion allocation. The Ministry of Information Technology recorded expenditure of Rs1.45 billion, representing just 7.4% of its annual allocation of Rs19.6 billion.
Development expenditure across the provinces and special areas, including Azad Jammu and Kashmir and Gilgit-Baltistan, also remained limited during the reporting period. Combined spending reached Rs23.8 billion, representing approximately 10% of the annual allocation of Rs233 billion. This was considerably below the Rs59.8 billion authorised by the Planning Commission for the first four months. These special areas receive development financing through the Finance Division under a separate seasonal disbursement arrangement. The figures indicate that slow utilisation is not limited to federal ministries and corporations, but also extends to development programmes operating across provincial and special administrative areas. The limited expenditure could affect the implementation schedules of infrastructure, public services and other development initiatives that depend on timely funding.
Spending on climate-related and food security programmes also remained particularly low despite their importance to Pakistan’s development priorities. The Climate Change Division utilised only Rs259 million during the first four months, accounting for 10.4% of its Rs2.5 billion annual allocation. This limited utilisation comes as Pakistan remains exposed to floods, extreme weather conditions and other climate-related disasters that require investment in preparedness, adaptation and resilience. The National Food Security Division performed even more poorly, spending just Rs65 million, or less than 1.5% of its Rs4.2 billion allocation. Furthermore, around six federal ministries were unable to record any development expenditure during July-October. These included the ministries and divisions responsible for commerce, communications, Kashmir Affairs, Gilgit-Baltistan and States and Frontier Regions, petroleum, privatisation, and religious affairs and interfaith harmony. The absence of expenditure across these departments highlights the uneven implementation of the federal development programme.
The overall spending pattern presents a challenge for Pakistan’s development objectives, as substantial allocations and authorised releases have yet to translate into corresponding expenditure on the ground. While the first-quarter budget surplus reflects the government’s efforts to maintain fiscal discipline, the slow utilisation of development funds raises concerns about the pace of public investment and the delivery of projects intended to support economic growth and improve living standards. The difference between approved allocations, authorised disbursements and actual spending also points to implementation constraints across several government departments. With the remaining quarters of FY2026-27 carrying a significant share of the annual development programme, the pace at which ministries and implementing agencies execute approved projects will remain important for determining whether the government can meet its development targets without compromising its fiscal commitments.
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