ISLAMABAD, Jun 02 (APP): Minister for Planning, Development and Special Initiatives Professor Ahsan Iqbal on Monday said the Annual Plan Coordination Committee (APCC) has prepared a Rs 1,000 billion Public Sector Development Programme (PSDP) proposal for the fiscal year 2025–26.
“It will now be forwarded to the National Economic Council (NEC) for final approval,” he said while talking to media after chairing the APCC meeting.
Explaining the plan, he said, APCC has given priority to projects of national importance and those nearing completion, despite stringent fiscal constraints.
“We are operating under very tight financial discipline due to our agreement with the International Monetary Fund (IMF), which is necessary to create balance between our revenue and expenditures,” he said.
Out of the proposed Rs1,000 billion development plan, the minister said, Rs664 billion have been proposed for infrastructure, including major investments in energy, water, transport, and housing. Of this, the highway and power sectors would absorb the largest share, he added.
Ahsan Iqbal said a further Rs150 billion would go to social sectors, while Rs63 billion was set aside for Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB). The merged districts of former FATA in Khyber Pakhtunkhwa would receive
Rs70 billion.
Other allocations, he said, included Rs53 billion for science and IT, Rs11 billion for the production sectors, and Rs9 billion for governance and institutional reforms.
The minister clarified that Rs120 billion of the total development envelope was being proposed specifically for the dualization of the Chaman–Quetta–Karachi National Highway (N-25) into an expressway, a directive from the Prime Minister. Excluding this, the available budget for general PSDP projects stood at Rs880 billion, he added.
The minister linked the budget squeeze to Pakistan’s growing debt burden, explaining that as much as 56 per cent of national expenditure was now consumed by debt servicing.
“In 2018, our defence and development budgets were both Rs1,000 billion. Today, development has taken a backseat,” he said, adding this was the fallout of years of unchecked borrowing and a high policy rate regime [during the PTI government tenure].
He said that the government’s primary revenues, after transferring the provincial share, were barely sufficient to meet debt obligations. “There’s virtually nothing left for development unless we dramatically expand our revenue base,” he warned.
The Ministry of Planning, he said, has introduced reforms to minimize project delays and cost overruns, adding a revamped project appraisal mechanism saved the government billions in the past year.
He said an enhanced monitoring and evaluation system, leveraging digitization and satellite imagery, was now being deployed to track progress and prevent waste.
“We have moved away from token allocations that previously only served to open files. Now, the focus is on actual implementation and completion,” he said.
Ahsan Iqbal said priority would be given to projects with foreign funding requiring rupee counterpart financing, as well as those 70 to 80 per cent complete.
Despite limited fiscal space, the minister said, the government has set an ambitious GDP growth target of 4.2 per cent for FY2025-26, supported by a 4.5 per cent growth in agriculture, 4.3 per cent in industry and 4.0 per cent in services.
He said export targets have been raised to $35 billion, and worker remittances are projected to cross $39 billion, up from $27 billion in FY2022–23 and $37 billion estimated for FY2024–25.
“I want to thank our overseas Pakistanis because they despite calls for a boycott [from the PTI leadership], they increased remittances by $10 billion in two years. These remittances are the oxygen for Pakistan’s economy,” he said.
On the fiscal side, tax collection by the Federal Board of Revenue (FBR) has risen 26 per cent, a historic increase, the minister said.
However, he said Pakistan still suffered from one of the lowest tax-to-GDP ratios in the world, currently at just 10 per cent, which needed to be taken to 16-18 per cent.
Ahsan Iqbal issued a stark warning about Pakistan’s fiscal future, saying that without substantial increases in tax collection, development would stagnate.
“If we want modern schools, hospitals, roads, and technology, we must fund them ourselves. We can’t compare our infrastructure to Europe and the U.S. if we aren’t even willing to pay our fair share in taxes,” he said.
The minister urged the nation to support efforts to raise the tax-to-GDP ratio to 16–18 per cent over the next five years. “The salaried class has borne a burden of Rs400 billion. In contrast, large segments of the commercial community barely pay half of it [as compared to salaried class].”
Ahsan Iqbal said Pakistan’s development needed water conservation, climate resilience, and technological preparedness, hinge entirely on increasing fiscal capacity.
The government, he said, has projected the size of the economy would grow from Rs114 trillion to Rs129.6 trillion in FY2025-26, with inflation targeted at 7.5 per cent.
The minister said the government was working to strike a balance between external debt repayments, increasing domestic revenues, and sustaining development expenditures.
Under the “Uraan Pakistan” initiative, he said, a series of measures were being undertaken to gradually enhance the development budget and mobilize resources to transform the national economy on sustainable basis.