ISLAMABAD: The federal government of Pakistan has proposed allocating more than Rs. 70 billion for development schemes linked to members of parliament in the upcoming FY2026–27 Public Sector Development Programme (PSDP), despite mounting fiscal constraints and limited capacity to accommodate new projects.
According to sources, the allocation has been earmarked for the Sustainable Development Goals (SDGs) Achievement Programme, a funding mechanism commonly used to finance development projects recommended by parliamentarians across constituencies nationwide.
The proposed allocation comes at a time when federal development spending is under severe pressure. Planning authorities disclosed that ministries and divisions collectively demanded over Rs. 4.1 trillion for development projects in FY2026–27. However, the Finance Division provided an indicative federal PSDP ceiling of only Rs. 1.126 trillion, leaving a wide funding gap.
SDGs programme retains Rs. 70bn allocation
Official budget documents show that the SDGs Achievement Programme will account for approximately 6.2 percent of the proposed federal PSDP for the next fiscal year.
Notably, the allocation for the programme remains unchanged from the original FY2025–26 level of Rs. 70 billion, despite increasing demands from key social and infrastructure sectors and growing pressure to rationalize discretionary development spending.
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Infrastructure dominates federal development priorities
Under the proposed PSDP, infrastructure projects continue to dominate federal development priorities, securing nearly Rs. 730 billion, or around 65 percent of the total federal development budget.
Within this envelope:
- Transport and communications projects have been allocated approximately Rs. 409 billion
- Water sector projects will receive Rs. 140.4 billion
- Energy sector schemes have been earmarked Rs. 135.6 billion
Planning officials said the focus reflects the government’s emphasis on connectivity, energy security, and large-scale public infrastructure.
Rising liabilities and project delays raise concerns
Officials have warned that the federal development portfolio is burdened by a throw-forward liability exceeding Rs. 10 trillion, while more than 90 percent of ongoing projects are affected by cost overruns, implementation delays, or funding shortfalls.
In light of these challenges, the government has indicated that new development projects will largely be discouraged in FY2026–27. Instead, available resources will be directed toward completing strategically important ongoing schemes and projects backed by foreign financing.
Analysts say the continued allocation for parliamentarian-linked schemes amid tightening fiscal space is likely to reignite debate over development priorities, transparency, and the efficiency of PSDP spending.
