Punjab halts new scheme funds as work begins on FY27 budget

LAHORE: The Punjab government has started work on its budget for the 2026-27 fiscal year and, as part of the process, has immediately stopped the release of funds for all new development schemes.

According to the orders issued during the budget preparation exercise, payments of pending dues to contractors have also been suspended. In addition, all departments, autonomous bodies, special municipal corporations and district councils have been directed to return any unspent funds to the provincial treasury.

The restrictions will remain in place until June 30, with all payments halted except those related to salaries and pensions.

The move has drawn criticism from contractors, who have warned that the suspension of funds will leave ongoing development works unfinished.

Departments asked to submit proposals

At the same time, departments including health, education and forestry have been instructed to send proposals for development schemes for the next financial year within two weeks.

The outgoing fiscal year also saw the Punjab government fall short of its tax goals, with no department managing to achieve its assigned revenue target.

Posts to remain unfunded

Officials said around 150,000 permanent posts that had already been abolished will not be given any allocation in the upcoming budget. They added that another 100,000 permanent positions, ranging from grades 1 to 22, are expected to be removed by the end of May, and these posts will also receive no funding in the new fiscal plan.

Under the upcoming budget framework, the government will continue to finance the Annual Development Programme. However, departments are expected to face major reductions in their development allocations.

Large funding commitments are likely to be concentrated mainly on mega projects approved at the provincial level in Lahore.

The latest measures indicate that the provincial administration is tightening expenditure controls as it prepares the next budget, while also reshaping development spending priorities and limiting allocations for posts that have been or are expected to be abolished.