EDITORIAL: On 18 May 2025, Prime Minister Shehbaz Sharif constituted a committee to finalise next year’s federal Public Sector Development Programme (PSDP) after the ministries formally requested 2.8 trillion rupees for ongoing and new projects while the Planning, Development and Special Initiatives Ministry cognizant of the limited fiscal space requested 1.5 trillion rupees.
However, the Finance Ministry grappling with the International Monetary Fund (IMF) conditionalities under the ongoing programme stipulated that it could not allocate more than a trillion rupees for next fiscal year — a proposed amount that is 400 billion rupees lower than what was budgeted in the ongoing fiscal year. It was reported that the Prime Minister directed the finance ministry to increase the allocation though it is unclear whether the IMF would insist on capping it at one trillion rupees.
While chairing the Annual Plan Coordination Committee, Ahsan Iqbal, the federal minister for Planning, Development and Special Initiatives, acknowledged that the government is constrained not to increase PSDP next fiscal year in view of the fiscal discipline agreed with the IMF. The meeting was informed that as of 31 May 2025 federal budgeted PSDP had been reduced to 1.1 trillion rupees (or by 300 billion rupees) with 1.036 trillion rupees authorised though only 596 billion rupees had been utilised.
The low utilisation rate not only reflects non-release of funds due to fiscal constraints but also to the low absorption rate of our ministries.
Thus the actual utilisation amount for the current year indicates that during the first 11 months of the year the shortfall from what was budgeted was a whopping 806 billion rupees, which is not unusual as administration after administration has budgeted an unrealistic amount for PSDP, citing it as indicative of its focus on the people of the country while mercilessly slashing it at the end of the fiscal year to ensure that the budget deficit is sustainable.
The PSDP shortfall is one of the highest in recent history; however, this can be explained by the fact that the state of the economy remains fragile notwithstanding the stability achieved with support from the IMF-led multilaterals and the three friendly countries — China, Saudi Arabia and the United Arab Emirates.
And this was the focus of Iqbal who reportedly stated that “we are not just managing a budget — we are shaping the future. The world may see limitations but we see opportunities…together let us rise and lead Pakistan towards sustainable development, economic dignity and national pride” — sentiments that no doubt resonate with the general public full of pride subsequent to the defence forces exemplary performance after India’s unprovoked attack on our soil.
It is important to note that Pakistani administrations in general and the PML-N governments in particular have emphasised investment in physical infrastructure, which is tangible and therefore considered to generate political support as opposed to social infrastructure, which takes more than a decade to show positive results on the economy.
One would, therefore, urge the government to review the reasons behind the China’s meteoric rise as an economic superpower with one being the rise in literacy rates.
Today the US literacy rate is reported at 79 percent (with 54 percent of Americans only being able to read at grade 6 level) with China registering an impressive 99 percent — a factor that accounts for the Chinese outpacing the US in technological advances (an example being the breakthrough made by the Chinese company DeepSeek, an Artificial Intelligence development firm providing the service at an infinitesimal fraction of the cost of US companies in the field).
The country needs long-term investment in social sectors in general and education in particular to ensure long-term sustainable growth and a resilient economy.
Copyright Business Recorder, 2025