The federal government has reduced the Public Sector Development Programme (PSDP) by Rs172.8 billion to Rs837.16 billion, as it seeks to manage fiscal pressures and meet the primary surplus target agreed with the International Monetary Fund (IMF). Officials said the cuts were implemented in two phases, with Rs100 billion reduced in March and a further Rs73 billion cut later, bringing the total reduction from the original Rs1 trillion allocation approved by the National Assembly. The Ministry of Finance has formally communicated the revised PSDP allocation of Rs837.16 billion to the Planning Ministry, confirming the second downward revision from Rs900 billion earlier this year.

The largest reduction of Rs38 billion was made in the National Highway Authority (NHA), followed by Rs23 billion cuts in water sector projects and Rs22.5 billion in provincial schemes. Under the revised allocations, the provinces and special areas have been allocated Rs201.283 billion, including Rs67.975 billion for special areas, Rs37.3 billion for Azad Kashmir, Rs30.671 billion for Gilgit-Baltistan and Rs54.185 billion for merged districts of Khyber Pakhtunkhwa. The Water Resources Division allocation has been reduced to Rs106.6 billion, while the Higher Education Commission (HEC) has been allocated Rs34.9 billion and the Federal Education and Professional Training Division Rs26.6 billion.

Other allocations include Rs18.4 billion for the Ministry of Information Technology, Rs11.6 billion for National Health Services, Rs18.558 billion for Railways, Rs20.4 billion for the Planning Commission, Rs13.446 billion for Housing and Works, and Rs12.213 billion for the Revenue Division. The Interior Division has been allocated Rs11.5 billion, Petroleum Division Rs718 million, Pakistan Atomic Energy Commission Rs761 million, SUPARCO Rs4.486 billion, Science and Technology Rs3.396 billion, Maritime Affairs Rs2.6 billion, and Industries and Production Rs1.576 billion. The allocation for the Cabinet Division under the Sustainable Development Goals programme stands at Rs63.2 billion, while the Board of Investment has been allocated Rs915.2 million and the Finance Division Rs580.8 million.

Smaller allocations include Rs503 million for the Special Investment Facilitation Council, Rs929 million for Inter-Provincial Coordination, Rs1.583 billion for Law and Justice, Rs1.448 billion for Kashmir Affairs and Gilgit-Baltistan, Rs400 million for Religious Affairs, Rs198 million for National Heritage and Culture, Rs23 million for Human Rights, and Rs50 million for the Commerce Division. Overall development spending has remained low, with Rs409 billion utilised during the first nine months of the fiscal year, accounting for 41% of the original allocation. Sector-wise, the NHA’s revised allocation stands at Rs185 billion, with Rs73 billion spent so far, while the Power Division’s allocation has been reduced to Rs75 billion with utilisation of Rs41 billion.

The Water Resources Division recorded nine-month spending of Rs47 billion, reflecting slow utilisation against revised allocations. Despite the reductions, certain expenditures have been protected, including parliamentarians’ schemes and Balochistan flood rehabilitation projects. The cuts come as the government attempts to maintain a primary surplus target of 2.6% of GDP agreed with the IMF, although external assessments indicate the target may still be missed.