Federal Minister for Planning and Development Ahsan Iqbal on Monday warned that a large portion of Pakistan’s budget is being consumed by debt servicing and paying off bad loans, leaving limited fiscal space for development projects and future growth.
He said rising debt repayments are increasingly crowding out development expenditure. There is no room for infrastructure and growth-oriented initiatives.
The minister noted that the federal Public Sector Development Program (PSDP) has remained largely stagnant at around Rs. 1,000 billion over the past eight years, while provincial development budgets have expanded from Rs. 1,000 billion to Rs. 2,869 billion during the same period.
He said the total cost of ongoing development projects has now surged to Rs. 10,818 billion.
For the next fiscal year 2026–27, a development outlay of Rs. 1,126 billion has been proposed. However, ministries have submitted demands worth Rs. 4,097 billion, leaving a wide funding gap of over Rs. 3,000 billion that cannot be met under current fiscal constraints.
Ahsan Iqbal said the government will prioritize high-impact projects, with special focus on infrastructure in underserved regions, including increased attention to Balochistan.
He also confirmed proposed allocations of Rs. 125 billion for the N-25 Pakistan Expressway and Rs. 153 billion for Azad Jammu & Kashmir, Gilgit-Baltistan, and merged districts.
He added that fiscal consolidation is necessary as Pakistan continues to manage heavy repayment obligations from loans taken between 2019 and 2022.
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