Ahsan stresses prioritisation of development projects amid fiscal constraints

ISLAMABAD, Jun 1 (APP):Federal Minister for Planning, Development and Special Initiatives Professor Ahsan Iqbal on Monday stressed the need to prioritise and complete ongoing development projects, saying limited fiscal space and a growing throw-forward had made it impossible to fund all schemes under the Public Sector Development Programme (PSDP).

Addressing the Annual Plan Coordination Committee (APCC) meeting for the 2026-27 budget, the minister said the country’s development budget was insufficient to finance projects promptly, describing the situation as a major challenge for the planning process.

He said the government would have to increase development spending in the long run while ensuring that priority projects were completed and removed from the development portfolio.

Ahsan said some less important projects might not be continued due to resource constraints, adding that the completion of ongoing programmes remained the government’s foremost priority.

He said Pakistan’s economy was on a path to recovery and that the government would continue its efforts to provide relief to the common man through effective development planning.

Highlighting the scale of the challenge, the minister said the federal development portfolio carried a throw-forward of around Rs10 trillion, while ministries had sought nearly Rs4 trillion for ongoing projects.

He said ministries had projects worth Rs3.377 trillion under implementation and had also proposed around 720 new schemes, besides submitting more than 5,500 additional project proposals for consideration.

He said against total development demands of Rs4.097 trillion, the Ministry of Finance had allocated only Rs1.126 trillion for the PSDP 2026-27, leaving an unmet demand of about Rs3 trillion.

“This means we have to allocate Rs1.126 trillion against demands exceeding Rs4 trillion selectively,” he said, adding that many important projects could not be accommodated within the available fiscal envelope despite their significance for national development.

Ahsan termed the situation a major dilemma for the Ministry of Planning, saying development allocations were being made within a shrinking budget despite growing infrastructure and social sector needs.

The minister said the PSDP allocation of Rs1.126 trillion included Rs125 billion earmarked for the N-25 Highway project in Balochistan, which, he said, was a non-negotiable priority identified by the Prime Minister and would be completed at all costs.

He said around Rs87 billion had been set aside for projects proposed by coalition partners, while approximately Rs100 billion had been earmarked for development initiatives in Balochistan.

A further Rs153 billion, he said, had been allocated for Azad Jammu and Kashmir (AJK), Gilgit-Baltistan (GB) and the merged districts.

He said these funds ideally should be transferred through the National Finance Commission (NFC) mechanism, but in the absence of a consensus arrangement, they continued to be financed from the federal government’s share.

The minister said nearly Rs70 billion had been allocated for Sustainable Development Goals (SDGs)-related initiatives.

Explaining the financial constraints further, he said the remaining fiscal space was significantly reduced after accounting for rupee-cover requirements for foreign-funded projects supported by multilateral institutions, including the Asian Development Bank and the World Bank.

He said the demand for rupee cover had initially stood at Rs832 billion but was rationalised to Rs426 billion after consultations between the Economic Affairs Division and relevant ministries.

Ahsan said that after adjusting for these commitments and accounting for a Rs180 billion PSDP cut carried over from the previous year, the development programme faced a deficit position, leaving virtually no room for new projects.

He urged all stakeholders to keep the fiscal realities in mind while presenting development proposals and prioritise schemes that could deliver maximum public benefit and contribute to national growth.