Ministries and divisions see a Rs68bn budget cut, with an additional Rs32bn trimmed from corporations’ allocations.
ISLAMABAD: The government has cut the current fiscal year’s development budget by 10%, reducing it from Rs1,000 billion to Rs900 billion, with the saved funds earmarked for austerity measures, The News reported on Thursday.
Amid geopolitical tensions that have driven up POL prices in the international market, the government has resorted to austerity measures to free up resources for fuel subsidies.
Over the past two weeks, subsidies have kept petrol and diesel prices stable, though the prices of Hi-Octane and kerosene were significantly increased.
Of the Rs390 billion initially allocated for contingency measures, part of the funds was spent on constructing Daanish Schools, while the remainder is now being directed toward fuel subsidies. The exact balance of this allocation remains unclear.
To manage potential supply disruptions and price shocks, the government is also exploring options for implementing a smart lockdown.
According to the Ministry of Planning, budgets of ministries and divisions were reduced by Rs68 billion, while an additional Rs32 billion was slashed from corporations’ allocations.
The Ministry of Finance has officially informed the Ministry of Planning, Development and Special Initiatives about a Rs100 billion reduction in the Public Sector Development Programme (PSDP). Minister for Planning Ahsan Iqbal confirmed that this represents a 10% cut in the PSDP.
“We have received a letter from the Ministry of Finance regarding a Rs100 billion cut in the PSDP,” the minister said, adding that all ministries and departments have been instructed to reduce their development budgets by 10%.
Ahead of the budget, the government had allocated Rs685.9 billion for ministries, divisions, and departments under the PSDP, including Rs583 billion for local projects and Rs102 billion as the foreign component. An additional Rs314 billion was set aside for corporations, including the NHA and Power Sector Corporation, bringing the total PSDP allocation to Rs1,000 billion.
Of the Rs583 billion earmarked for ministries and divisions, Rs254.55 billion has been spent during the first eight months (July–February) of the current fiscal year. Meanwhile, Rs106.7 billion of the Rs314 billion allocated for corporations has been utilized in the same period, bringing total PSDP fund usage to Rs361.2 billion so far.
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