• PSDP utilisation from July 2025 to May 2026 stands at Rs529.8bn, against Rs1.01tr allocation • Govt cuts development outlay by Rs173bn to finance fuel subsidies after Mideast conflict pushed up oil prices • Only Rs153.86bn spent on uplift activities in special regions ISLAMABAD: Amid a 17 per cent cut in allocations during the outgoing fiscal year, the government and its agencies struggled to implement the Public Sector Development Programme (PSDP), utilising only about half of the budget earmarked for public welfare projects during the first 11 months of FY26. According to the Ministry of Planning and Development, total PSDP utilisation amounted to Rs529.8bn during the first 11 months of the year, accounting for 52.4pc of the original allocation of Rs1.01 trillion. The utilisation was slightly lower than the 54pc recorded during the same period last year, when PSDP expenditure stood at Rs596bn against an allocation of Rs1.1tr. In the aftermath of the US-Israel attack on Iran, the government slashed PSDP allocations by Rs173bn to provide fuel subsidies as petroleum prices surged. As a result, the actual utilisation impr­oved to 63pc of the reduced envelope of Rs837bn. The government started bulk disbursements to parliamentarians’ schemes, codenamed the Sustainable Development Goals (SDGs) Achiev­ement Programme (SAP), after the first five months of the fiscal year and disbursed about 70pc (Rs44bn) before the close of the third quarter. As of the end of May, the Planning Commission had authorised almost 100pc (Rs63.236bn) of the revised annual allocation, but actual utilisation remained stuck at Rs44bn, or 70pc of the budget. Interestingly, these funds were authorised and spent within a short span of around four months, making it the fastest-executed programme. As of May 31 this year, ministries and divisions had sanctioned disbursements of Rs835.6bn, almost the entire revised allocation of Rs837.16bn, against which actual expenditure of Rs529.8bn, or 52pc of the original allocation, had been reported. The annual PSDP allocation in the budget for 2025-26 originally amounted to Rs1.01tr. Compared to the relatively healthy spending on parliamentarians’ sche­mes, disbursements to sp­­e­­cial regions, including Azad Kashmir and Gilgit-Baltistan, struggled. Only Rs153.86bn was spent on development activities in these areas, accounting for 62pc of their annual allocation of Rs249.2bn. Funding for these special areas had already been cut by Rs52bn to finance fuel subsidies. Utilisation remained well behind the disbursement schedule approved by the government and lower than last year’s performance. PSDP expenditure during the first 11 months of the previous fiscal year amounted to Rs5­96bn, accounting for 54pc of the Rs1.1tr allocation. Under the mechanism announced by the Ministry of Finance for the current fiscal year, the government was required to release 15pc of the budgeted allocation in the first quarter, followed by 20pc in the second quarter, 25pc in the third quarter and the remaining 40pc in the last quarter of the fiscal year. The objective was to ens­ure that any shortfall in revenue collection could be managed through cuts in development spending wh­­i­­le remaining within fiscal targets agreed with the IMF. Under this release mechanism, PSDP spending should have crossed at least Rs878bn, or 87pc of the original allocation. Even under the reduced PSDP envelope of Rs837bn, utilisation should have reached Rs730bn. All 33 federal ministries together utilised only Rs391bn during the first 11 months, accounting for 68pc of their revised allocation of Rs577bn. The two major corporations dealing with physical infrastructure, the National Highway Authority (NHA) and the power sector, together consumed only 53.5pc of their revised allocation of Rs260bn. Of this, the power sector utilised Rs53.7bn against its revised allocation of Rs75bn, reflecting a utilisation rate of 73.5pc. The NHA, on the other hand, spent Rs85bn during the 11-month period, accounting for 46pc of its revised budget of Rs185bn. The all-important water sector utilised Rs69.9bn, or 65pc, against its revised allocation of Rs106.6bn, even as the country continued to rank among water-scarce nations amid infrastructure constraints. Both Pakistan Railways and the Planning Commission utilised Rs15bn each against separate allocations of Rs20bn, reflecting utilisation rates of 75pc. The higher education sector was among the top performers, spending Rs28bn during the first 11 months against its revised allocation of Rs35bn, translating into an almost 80pc utilisation rate. Likewise, the Ministry of Federal Education and Professional Training utilised Rs21bn against an allocation of Rs27bn, or about 78pc. The National Health Services sector utilised Rs3.9bn against an allocation of Rs11.635bn, acco­unting for just 33pc. Simi­larly, the Information Tech­nology Division spent Rs4.9bn against an annual allocation of Rs16.5bn, reflecting a utilisation rate of 30pc. It may, however, be noted that the Planning Commission had authorised Rs835.6bn during the first 11 months against the revised PSDP size of Rs837bn, meaning that authorisations were broadly in line with the fiscal release strategy. However, actual utilisation lagged because of resource constraints and the weak implementation capacity of executing agencies. The PSDP portfolio also included 86 foreign-funded projects with a total cost of Rs4.2tr, of which 25 projects were fully foreign-funded while the remaining 61 were implemented with local counterpart fin­a­ncing. For FY26, a rupee cover of Rs229bn was allocated for these projects. The planning ministry authorises one-line releases to all sponsoring ministries and divisions in line with quarterly ceilings set by the Finance Division under the development budget release strategy. Principal accounting officers are empowered to release and sanction funds for both foreign-aid and local components based on the requirements of individual projects. Published in Dawn, June 17th, 2026