PSDP spending stays slow despite revised development budget

ISLAMABAD: Development spending under the Public Sector Development Programme remained subdued during the first 10 months of the current fiscal year, even after the federal government reduced the size of the annual development budget because of fiscal pressures, according to the Monthly Development Update for May 2026 released on Wednesday.

The report showed that utilisation under the PSDP reached 56pc during 10MFY26. Actual spending stood at Rs469.9 billion against releases of Rs571.2bn, reflecting an 18pc shortfall in utilisation over the period.

The government also revised down the overall development outlay for FY26 to Rs837.2bn from the originally projected Rs1,010bn, a reduction of Rs172.8bn. According to the update, the ongoing conflict in the Middle East and continuing fiscal pressures prompted a series of austerity steps, including the cut in the PSDP for 2025-26.

Spending remains below schedule

The update said overall utilisation continued to lag behind the disbursement schedule approved by the government, although it was slightly better than the level recorded in the same period last year. In 10MFY25, PSDP expenditure had amounted to Rs448.6bn against an allocation of Rs1.096 trillion, translating into utilisation of 41.96pc.

As of April 30, ministries and divisions had sanctioned Rs571.2bn, of which Rs469.9bn had been spent. This represented 82pc of the actual allocation. The annual PSDP allocation for 2025-26 stood at Rs1tr.

Parliamentarians’ schemes move faster

The government stepped up releases for parliamentarians’ development schemes under the Sustainable Development Goals Achievement Programme after the first five months of the fiscal year. During the 10-month period, the Planning Commission authorised nearly 70pc, or Rs44bn, of the revised annual allocation of Rs63bn, and almost the entire amount had already been utilised.

Most of these funds were released and spent within about five months, making it one of the fastest-executed development programmes.

Weak releases for merged districts and special regions

In contrast, the planning ministry released only Rs16.8bn for the merged districts, formerly Fata, during 10MFY26 against a revised annual allocation of Rs54.3bn. Utilisation of development funds for the tribal areas stood at 31pc.

The update also showed weaker disbursements for special regions, including Azad Jammu and Kashmir and Gilgit-Baltistan, compared with spending on parliamentarians’ schemes. Rs60.4bn was spent on development activities in these areas, accounting for 89pc of the revised annual allocation of Rs67.7bn.

The figures indicate that while some segments of the development programme saw faster execution, overall PSDP spending remained well below the pace envisaged by the government for the current fiscal year.