An employee counts Pakistani rupee notes at a bank in Peshawar, Pakistan August 22, 2023. REUTERS/Fayaz Aziz
The government is considering a major reduction of Rs. 300 billion in development funds for the current fiscal year, sources in the Planning Commission told ProPakistani.
The move comes as revenue collection falls short and authorities aim to meet the primary balance target.
If approved, the 30% cut would shrink the Public Sector Development Programme (PSDP) to below Rs. 1 trillion, with the total allocation potentially dropping to just Rs. 700 billion. The move is expected to impact funding for several key projects across the country.
The government had initially earmarked Rs. 1.4 trillion for development spending this year.
However, with the proposed reduction, development expenditure will be nearly Rs. 400 billion less than the Rs. 1.096 trillion spent last fiscal year.
Officials say the cut is necessary to manage fiscal pressures, but it will likely slow progress on critical infrastructure and social sector projects.