ISLAMABAD: Federal Minister for Planning, Development and Special Initiatives, Ahsan Iqbal said the Public Sector Development Programme (PSDP) has shrunk from 2.6 percent of the GDP in 2018 to just 0.8 percent in 2025, placing significant pressure on the country’s ability to maintain sustainable economic growth and generate job opportunities.
The minister said, “The development budget is the backbone of national progress. In view of the International Monetary Fund (IMF) programe, there are restrictions due to which the development budget has been curtailed. Therefore, every rupee must be spent on high-priority projects.”
The minister chaired a high-level review meeting to assess the full-year performance of the Public Sector Development Programme (PSDP) 2024–25, along with the first quarter review of authorization and expenditures under PSDP 2025–26.
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The session focused on the progress of development projects executed by ministries/divisions/provinces as well as strategies to streamline and optimize limited development funds earmarked for development projects under the 2025-26 PSDP.
The meeting was attended by senior management of the Planning Commission, Federal Secretaries, and senior officials from federal ministries, divisions, and provincial departments.
While addressing the ministries, Ahsan Iqbal expressed concern over the shrinking development space, stating, “For the first time in Pakistan’s history, PSDP utilization crossed Rs. 1 trillion last year, which was a record achievement. Unfortunately, this year, we are moving in reverse.”
The minister informed that a special committee was constituted by the Prime Minister upon the request of the Planning Ministry. He said that the committee conducted a four-day intensive review of all ongoing projects. He said that the committee recommended Rs. 1267 billion for PSDP 2025-26, however, only Rs. 1000 billion was earmarked by the Finance Division.
He stressed the need for every ministry to thoroughly reassess its portfolios and bring forward only essential and high-impact projects. He also noted that delays in project revision often result in cost escalations, as seen in the past when 36 projects were revised last year, doubling their cost, and 26 projects were revised this year under similar circumstances. The impact of cost revision/escalation was over Rs. 1.1 trillion, he said.
It was briefed in the review meeting that the PSDP 2024–2025 started with a total throw-forward Rs. 10,216 billion. The sponsoring agencies demanded Rs. 2,904 billion for their ongoing projects. The original allocation of Rs. 1,400 billion was revised downward to Rs. 1,100 billion. The actual utilization against the allocation fund was Rs. 1,077 billion (98 percent).
The ministry presented a performance review of ongoing projects, highlighting the need for improved fund utilization amid fiscal tightening.
Moreover, portfolio review of PSDP 2024-25 was conducted after mid-year review, and 221 projects were planned to be completed, while 123 were to be capped by June 2025. Resulting in a significant reduction of Rs. two trillion in the overall throw-forward, efforts have been made to focus on fast-moving and important projects of national significance.
Copyright Business Recorder, 2025