The federal government has reduced its development budget by Rs100 billion in a bid to avoid increasing petroleum prices. The move comes amid ongoing economic challenges and IMF-driven fiscal discipline.
The government has cut the Public Sector Development Programme (PSDP) by 10%, bringing the total allocation down from Rs1,000 billion to Rs900 billion.
Federal Minister for Planning Ahsan Iqbal confirmed the reduction while speaking to the media in Islamabad. He stated that all development projects have been subjected to a uniform 10% cut as part of the revised fiscal strategy.
According to sources, the primary objective behind the Rs100 billion cut is to avoid increasing petroleum product prices. The decision was taken in consultation with the Ministry of Finance, reflecting the government’s effort to ease inflationary pressure on the public.
Officials believe that reducing development spending can help manage fiscal space without passing additional burden onto consumers through fuel price hikes.
IMF influence and economic pressures
The move also comes in the context of ongoing economic review talks with the International Monetary Fund (IMF). Sources said the IMF had urged the government to control unnecessary expenditures in light of the global economic crisis.
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This recommendation appears to have influenced the decision to scale back development spending.
The pace of spending under the development budget has also been slower than expected. In the first eight months of the current fiscal year, only Rs361 billion has been utilised for federal development projects.
This accounts for just 36% of the total development budget, indicating delays in project execution and fund utilisation.
The reduction in the PSDP highlights the government’s attempt to balance development priorities with economic stability. While the cut may slow down some development projects, it is being viewed as a necessary step to control inflation and maintain fiscal discipline.
