IMF assured of allocating 10 percent of funds for development projects in the upcoming budget

The federal government has assured the IMF of allocating up to 10 percent of the total budget for development projects in the budget for the next fiscal year 2026-27. The IMF review mission will come to Pakistan next month where final consultations will be held on all the important targets of the budget including the total budget volume, GDP target, tax collections, budget deficit, PSDP and debt servicing.

The situation regarding the development budget is worrying. In view of the financial problems, it is proposed to keep the PSDP limited in the next fiscal year as well and the Finance Ministry has already rejected the proposal to allocate Rs 3,000 billion for PSDP. Various ministries have asked for Rs 7,000 billion for more than 300 new projects, but the government’s priority is to complete the already ongoing projects instead of starting new projects.

Talking about the current fiscal year, Rs 1,000 billion was allocated for PSDP, but only Rs 450 billion could be spent from July to April. The total cost of 1100 development projects is over Rs 13,000 billion and the throw-forward is about Rs 1,000 billion, which shows that many projects are still waiting for completion.

In the upcoming budget, unnecessary tax exemptions will be further eliminated and the budget draft is being prepared in the light of suggestions from FPCCI, Chambers of Commerce and Trade Organizations. All targets will be set in line with the benchmarks agreed with the IMF.