PM Shehbaz Sharif Eyes Jobs, Exports & Relief as Budget 2025-26 Takes Shape Amid IMF Constraints
The Government of Pakistan has officially announced that the Federal Budget for the fiscal year 2025–26 will be presented on June 2, with a significant 16% reduction in the Public Sector Development Programme (PSDP). The government has slashed the upcoming development budget to PKR 921 billion, a steep drop from the revised PKR 1.1 trillion, sparking serious apprehensions that up to 200 active development projects may be halted or shelved due to insufficient funding.
Federal Minister for Planning and Development, Ahsan Iqbal, made the announcement during a press conference, revealing that the Ministry of Finance has allocated an Initial Budget Ceiling (IBC) that falls far short of the PKR 2.9 trillion requested by the Planning Commission. He confirmed that he would formally challenge the IBC and appeal to the Prime Minister for a minimum allocation of PKR 1.6 trillion for foreign-aided projects to ensure rupee-based funding.
Ahsan Iqbal unveiled the “Monthly Development Review Report – May 2025”, a first-of-its-kind initiative modeled after the Economic Survey, offering a detailed snapshot of ongoing budget implementation and outlining strategic development priorities for the coming fiscal period. He disclosed that approximately PKR 900 billion has been authorized for disbursement in the current fiscal year, with more expected in May and June. However, he emphasized that increasing the tax-to-GDP ratio is critical to strengthening financial space for development spending.
The Annual Planning Coordination Committee is scheduled to meet on May 23, followed by the National Economic Council (NEC) meeting on May 26 or 27, where final approval of economic targets and the PSDP will be granted.
Iqbal pointed out the severe consequences of budget cuts, noting delays and cost escalations in major projects like Diamer Bhasha Dam, which has ballooned from PKR 480 billion to PKR 1.5 trillion, and the Dasu Hydropower Project, now costing PKR 1.7 trillion, up from PKR 500 billion. He blamed administrative negligence, citing the absence of a project director or chief financial officer, with WAPDA officials running the show unprofessionally.
He further criticized the mismanagement in the Neelum Jhelum Project, revealing that contracts were issued before appointing consultants, and astonishingly, the CFO held a Master’s degree in geography. Iqbal suggested that the WAPDA chairmanship should be transferred to a civilian, preferably a globally recognized hydrology expert, and he would be recommending this to the Prime Minister.
Aligning with the government’s “Uraan Pakistan” initiative, the upcoming development budget will prioritize job creation and economic revival. The Planning Minister stated that the approved projects will generate over 120,000 direct and indirect employment opportunities.
Separately, Prime Minister Shehbaz Sharif chaired a high-level meeting with economists and business leaders to shape the Federal Budget. The Prime Minister underscored the importance of crafting a people-centric budget, pledging targeted relief for low- and middle-income households and prioritizing job creation to ease their economic burdens. He directed that export-led growth, public-private partnerships, youth vocational training, and energy sector reforms be prioritized.
Sharif reiterated that reducing electricity costs for industries is a step toward enhancing production and competitiveness. He urged the private sector to partner with the government in driving national prosperity.