The federal government on Monday approved a Rs4.264tr national development programme for the fiscal year 2026-27, with provinces accounting for nearly three-quarters of the total allocation, while Planning Minister Ahsan Iqbal described Rs87b earmarked for coalition partners’ projects as the “cost of a coalition government”.
The Annual Plan Coordination Committee (APCC), chaired by Iqbal, recommended the development budget for final approval by the National Economic Council (NEC), which is scheduled to meet on Wednesday under Prime Minister Shehbaz Sharif, according to The Express Tribune.
Sources said the prime minister had also directed the finance ministry to explore an additional Rs200bn fiscal space for the federal Public Sector Development Programme (PSDP), currently proposed at Rs1.126tr.
Addressing a press conference after the meeting, Iqbal said the federal development budget was effectively reduced after accounting for fixed allocations to various sectors and projects.
He added that ministries had sought more than Rs4.1tr for development spending, while at least Rs2.9tr was required merely to complete ongoing schemes.
The APCC proposed a federal PSDP of Rs1.126tr, including Rs267bn in foreign assistance, representing a 35 per cent increase over the revised allocation for the outgoing fiscal year.
However, Iqbal expressed dissatisfaction with the size of the programme, arguing that it remained insufficient to meet the requirements of ongoing projects.
He said the government had allocated Rs87b for projects recommended by coalition partners, calling it the “cost of a coalition government”.
In addition, Rs70bn has been set aside to fund small-scale development schemes proposed by treasury lawmakers, with each member of the National Assembly receiving up to Rs500m for local projects.
According to sources, the finance ministry remains reluctant to expand the PSDP further due to fiscal limitations and commitments under the International Monetary Fund (IMF) programme.
The government may seek additional fiscal space either by increasing revenue targets for the Federal Board of Revenue or reducing expenditure elsewhere.
Mr Iqbal noted that the total cost of completing ongoing federal projects had risen to more than Rs10.8tr and warned that, at current funding levels, completion could take over a decade even without the addition of new schemes.