The federal government of Pakistan is preparing for difficult budget decisions after the Ministry of Finance proposed a development budget ceiling far lower than the amount requested for upcoming national projects.
According to officials, the Finance Ministry has set an indicative limit of around ₨. 1.126 trillion for the Public Sector Development Programme (PSDP) for fiscal year 2026-27.
However, the Ministry of Planning had requested nearly ₨. 2.9 trillion for ongoing and new development schemes.
Planning Minister Ahsan Iqbal confirmed that the finance authorities had shared the proposed spending limit while citing financial pressures and limited fiscal space.
Sources said different ministries and government departments had collectively demanded almost ₨. 4 trillion in development funding for the next fiscal year.
Due to economic constraints, officials were instructed to revise their proposals and prioritize only the most important and ongoing projects.
Reports also showed that the government had already reduced the current year’s PSDP allocation from ₨. 1 trillion to ₨. 820 billion through multiple cuts during FY26.
Officials stated that the Annual Plan Coordination Committee is expected to hold a meeting on May 20 with provincial governments and federal ministries to discuss the country’s economic framework and finalize recommendations for the next budget.
Meanwhile, the National Economic Council is likely to meet on May 22 under the leadership of Prime Minister Shehbaz Sharif before his planned visit to China.
The federal budget for FY27 is currently expected to be announced in early June, although officials indicated the schedule could still change slightly depending on final consultations and economic planning discussions.