The government is set to propose a Rs. 1 trillion Public Sector Development Program (PSDP) for fiscal year 2026-27 in the upcoming budget, part of a broader Rs. 3.675 trillion national development outlay that aims to accelerate economic growth, improve infrastructure, enhance digital transformation and promote inclusive development despite a resource-constrained fiscal environment.
According to budget documents, the National Economic Council (NEC) approved a national development outlay of Rs. 3.675 trillion, comprising Rs. 1 trillion for the federal PSDP, Rs. 2.224 trillion for provincial Annual Development Programs (ADPs) and Rs. 451 billion in development spending by state-owned enterprises (SOEs).
The government said the PSDP remains a key instrument for mobilizing domestic and foreign resources to support national development objectives under the 13th Five-Year Plan, URAAN Pakistan, and the government’s 5Es strategy focusing on Exports, E-Pakistan, Environment, Energy and Infrastructure, and Equity and Empowerment.
The federal PSDP allocation includes Rs. 255 billion in foreign assistance and Rs. 745 billion from local resources. Officials said the program has been formulated under strict fiscal discipline while maintaining focus on high-impact and strategically important projects.
The government noted that the development portfolio faces substantial throw-forward liabilities from ongoing projects, necessitating prudent project selection, efficient resource allocation and timely completion of existing schemes. As a result, strict controls have been imposed on the inclusion of new projects, with priority given to schemes aligned with national strategic objectives.
The PSDP portfolio has been aligned with the pillars of URAAN Pakistan, prioritizing projects aimed at boosting productivity, expanding digital infrastructure, fostering an artificial intelligence ecosystem, improving regional connectivity, and strengthening energy and water security. Adequate funding has also been earmarked to ensure completion of critical infrastructure projects within available fiscal space.
Under the proposed allocations, the largest share among federal ministries and divisions has been earmarked for Provinces and Special Areas, which would receive Rs. 233.39 billion, followed by the National Highway Authority with Rs. 224.51 billion, the Water Resources Division with Rs. 103.09 billion, and the Higher Education Commission with Rs. 46 billion.
The government said social sector development would remain a priority through expanded funding for higher education and the Daanish School initiative, aimed at improving educational opportunities for underserved communities as part of its equity and empowerment agenda.
Special emphasis has been placed on the development needs of Azad Jammu and Kashmir, Gilgit-Baltistan, and the erstwhile tribal areas of Khyber-Pakhtunkhwa, with allocations made to support their respective development programs and promote inclusive and balanced growth nationwide.
According to the documents, the total national development outlay includes Rs. 838 billion in foreign funding and Rs. 2.837 trillion from domestic resources, reflecting the government’s effort to sustain development spending while adhering to fiscal consolidation objectives.
The proposed PSDP allocations would be debated by Parliament as part of the federal budget process for FY2026-27, set to commence today (Friday) and continue until the passage of the finance bill.