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Govt Prioritises High-Value Projects Amid Rs880bn Development Budget Cap
Ahsan Iqbal: With only Rs880bn for development in 2025–26, Pakistan to focus on high-priority, high-value projects. IMF deal forces tighter spending.
ND
by News Desk
2025-06-02
Govt Prioritises High-Value Projects Amid Rs880bn Development Budget Cap

Federal Minister for Planning, Development, and Special Initiatives Ahsan Iqbal announced on Monday that the government will prioritise high-value national projects as only Rs880 billion is available for development under the upcoming Public Sector Development Programme (PSDP) 2025-26.

Speaking in Islamabad after a meeting of the Annual Plan Coordination Committee (APCC), Iqbal said the development budget has seen a consistent reduction since 2023, mainly due to rising debt repayments and inflation-related pressures, and now aligns with the International Monetary Fund (IMF)’s $7 billion programme, which demands austerity and fiscal discipline.

“Since resources are limited, we need to focus on high-priority projects for national development. We must ensure value for money,” said Iqbal, emphasising that efficiency and strategic investment are essential under current constraints.

Key Allocations in PSDP 2025–26:

·       Infrastructure (energy, water, transport): Rs664bn

·       Science & IT: Rs53bn

·       AJK & Gilgit-Baltistan: Rs63bn

·       Merged districts (KP): Rs70bn

·       Production Sector: Rs11bn

·       Institutional Reform Bodies: Rs9bn

·       Special Allocation: Rs120bn for N-25 Highway (Chaman–Karachi) upgrade

Priority Areas:

The minister said the government will prioritise strategic and near-completion projects while moving away from “token allocations” that cause delays and inefficiency.

High-priority projects include:

·       Diamer-Bhasha Dam

·       Sukkur–Hyderabad Motorway

·       Quetta–Chaman Road

·       Second phase of Karakoram Highway

·       Higher Education Commission (HEC) infrastructure

Iqbal stressed that projects nearing 70–80% completion will receive full support to prevent further cost overruns and to “move them off the books”.

GDP and Economic Outlook:

Pakistan is targeting:

·       GDP growth: 4.2%

o   Agriculture: 4.5%

o   Industry: 4.3%

o   Services: 4.0%

·       Exports: $35bn

·       Remittances: $39bn (with a target of $50bn in coming years)

·       Inflation: 7.7% (IMF projection)

Iqbal also thanked overseas Pakistanis for sending $37bn in remittances, which he described as “oxygen for the economy”.

Tax Reforms & Fiscal Reality:

Calling Pakistan’s tax-to-GDP ratio of ~10% one of the lowest in the world, the minister urged a national movement for tax compliance, likening tax evasion to a threat to national security.

“Every citizen must act as a watchman against tax evasion,” he said.

He confirmed that projects devolved to provinces will now be handed over to provincial governments, reducing federal load. Iqbal also revealed that 40% of PSDP is currently occupied by provincial projects — a sharp rise from 12–14% prior to 2018.

Projects on Hold:

To balance spending, Iqbal announced the identification of 118 low-priority projects worth Rs1000bn, which may be frozen, capped, or shut down.
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PakistanEconomy

PSDP

AhsanIqbal

Budget2025
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