Debt servicing and subsidy spending have repeatedly exceeded budget allocations over the past five fiscal years, according to a new budget assessment shared by the Karachi School of Business and Leadership (KSBL).
The report identified debt servicing as the largest source of expenditure deviation. Since FY23, actual debt payments have consistently surpassed original budget estimates.
Subsidy spending also exceeded budgeted allocations in nearly every year under review, often by huge margins. In contrast, the Federal Public Sector Development Program (PSDP) consistently recorded lower-than-budgeted spending.
The report found that expenditure heads driven by fixed obligations, such as defence, pensions and provincial transfers, generally remained closer to budget estimates.
However, spending categories influenced by policy decisions, economic conditions or implementation challenges showed the largest and most frequent deviations.
To improve budget credibility, the report recommends stricter scrutiny of budget heads that miss targets for two or more consecutive years.
It added that future estimates should be linked more closely to actual historical performance and major deviations in advance.