ISLAMABAD: The federal government Thursday announced that federal budget for fiscal year 2025-26 will be presented on June 2, with the Planning Ministry seeking a development allocation of at least Rs1,600 billion – significantly higher than the Rs921 billion ceiling proposed so far by the Finance Ministry.
Speaking at a presser, Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal said Finance Ministry has shared a resource envelope of just Rs921 billion for development programme for budget 2025-26 against the least requirement of Rs1,600 billion compared to estimated Rs2,900 billion by Planning Ministry for overall development programmes.
“Finance Ministry has so far declared Rs921 billion for next financial year as compared to Rs1,100 billion current fiscal year which is less Rs179 billion. It is very concern and challenging situation, we will hold held a meeting with Finance Ministry under the supervision of prime minister in regard.”
PSDP 2025-26, projections for 2026-27 and 2027-28: Ministry initiates process
The minister who also launched Monthly Development Update along with secretary planning and chief economist, also said: “We will need Rs700 billion from foreign development partners, and if our budget is that low, we will not be able to cover even it.”
The Ministry of Planning has objected to this low size of the resource envelope for the Public Sector Development Programme (PSDP) for the next budget, arguing that the scarcity of resources will hardly meet the rupee component requirement of Rs700 billion for donor-funded projects in the next fiscal year.
He said that the budget will be presented on June 2, 2025, and meeting of Annual Plan Coordination Committee (APCC) and National Economic Council (NEC) will be convened in third and fourth week of May 2025, respectively, for approving the macroeconomic and development budget.
He said that Finance Ministry shared indicative budget ceiling of Rs921 billion for the next fiscal year’s PSDP against total requirements of ministries/divisions and attached departments of Rs2.9 trillion.
“At least the PSDP allocation must hover around Rs1,600 billion to meet the financing requirement of ongoing and new initiatives under the Uraan Pakistan Program,” he added.
The Priorities Committee held meetings in more than one week’s period and came up with total requirements close to Rs3 trillion, he said, adding now we will take up this issue with the Ministry of Finance and other relevant forums.
He said the PSDP was revised downward from Rs1,400 billion to Rs1,100 billion for the current fiscal year, and the Planning Ministry has so far granted authorisation of Rs900 billion.
He said that it is expected that the utilisation of development funds will go close to Rs750 to Rs800 billion by the end of June 2025.
The utilisation of development funds stood at over Rs448 billion in the first 10 months of the current fiscal year.
He also said that the government abolished 200 projects from the PSDP, adding the scarcity of resources resulted in cost and time overruns of the developmental schemes.
“Without jacking up the tax-to-GDP ratio from 16 to 18 percent, the resource constraints cannot be overcome, so every segment of the society will have to contribute in taxes for improving the fiscal situation,” he added.
“We have to increase the tax to GDP in next budget for increasing development budget and investment.
We’ll authorise maximum funds in May and June to utilise for development projects.
In the past, we repay 52 percent of tax collection in the term of loan. If we do not increase tax-to-GDP ratio, then we could not increase development budget and we have to get more loans.“
Citing examples of Bhasha and Dasu dams where the cost overruns was ranging from Rs480 billion to Rs1,500 billion and Rs500 billion to Rs1,700 billion, respectively, he said there was no project director of Dasu and no permanent CFO. A road construction for Dasu, he added, was contracted in dollars, so the depreciation benefited the contractor.
As of the first 10 months of FY2024- 25, 191 out of 240 projects have been monitored, while 27 of 32 projects have undergone formal evaluation, he added.
He said in April 2025 alone, 20 mega projects were planned and another 20 were monitored. He said the monitoring strategy prioritises mega projects, special government initiatives, donor-funded intervention, projects under revision, and those facing implementation delays or specifically assigned by competent authorities. He said that the development projects resulted in the creation of 20,000 direct and 100,000 indirect jobs in the country.
He said that the government has decided to include only those development projects in its annual development programme for the next fiscal year, which would be aligned with Uraan Pakistan Programme.
He said that the process of strict scrutiny for the developmental projects was initiated in order to ensure the use of resources on such developmental projects, which would help create more job opportunities for sustainable economic growth and social prosperity.
He said that for maintaining transparency and judicious use of national resources to avoid the cost escalation of developmental projects, adding that a hotline, and an effective evolution and monitoring unit has been established within the Planning Ministry for effective monitoring of developmental projects as well as tapping the leakages.
“We’ve also established an effective coordination mechanism with our development partners and shared our priorities with them to align them with these priorities to carry forward the development goals of the government,” he added.
Iqbal said that government was also working with provincial governments on Uraan Pakistan Programme and different workshops were also held, to ensure appropriate use of national resources to attain sustainable economic growth and development.
Highlighting the economic achievements of the incumbent government during the 10 months of on-going fiscal year, according to him was the year of economic turnaround as inflation went down from 38 per cent to 2 per cent, adding that the headline inflation was recorded at 0.3 per cent during the month of April 2025.
Meanwhile, the current account surplus during the period under review stood at $1.86 billion as compared to the deficit of $1.65 billion of the corresponding period of the last year, he said adding that remittances grew by 33 per cent and reached to $33 billion against the same period of the last year.
The fiscal deficit also came down from 3.1 per cent to 2.2 per cent during the period under review, he said, adding that revenue collection witnessed about 26 per cent growth in first 10 months of the current fiscal year, which was historic.
The minister stressed the need for further enhancing the tax-to-GDP ratio in order to ensure resource generation for initiating mega developmental projects of social prosperity.
About the developmental expenditure during on-going fiscal year, he said that an amount of Rs900 billion was authorised during 10 months of current fiscal year and it was expected that the remaining allocated amount would be utilised by the end to the year.
The minister said that we are making sure the provinces increase the tax-to-GDP ratio and for this purpose we have conducted workshops.
He said that the provinces have 60 per cent of resources under the 18th Constitutional Amendment.
He also condemned the Indian aggression and killings of innocent civilians. He stated the international community has recognised Pakistan’s superiority in conventional warfare, emphasising that this capability is crucial for maintaining the regional balance of power.
Copyright Business Recorder, 2025
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