Pakistan will present its budget for the next fiscal year on June 2, with a development allocation reduced by 16%, amounting to Rs921 billion. This reduction will likely result in the closure of around 200 ongoing development projects. Planning Minister Ahsan Iqbal shared this update, noting that the budgeted amount is far below the Rs2.9 trillion requested by the Planning Commission for development needs.
The revised allocation is also lower than the current year’s amended budget of Rs1.1 trillion, which itself had been reduced from Rs1.4 trillion under International Monetary Fund (IMF) directives. The minister expressed concern over the cuts, indicating they could hinder foreign-funded projects due to a lack of local currency required to support them. He plans to appeal to the prime minister for a higher allocation of at least Rs1.6 trillion.
The Annual Plan Coordination Committee will meet on May 23 to finalize the development program in collaboration with provinces and regions, followed by the National Economic Council’s approval on May 26 or 27.
The funding cuts have drawn attention to delays and rising costs in key projects. For instance, the construction costs for projects like the Diamer-Bhasha Dam and the Dasu Hydropower Project have skyrocketed, with delays compounding the financial burden. The Dasu project’s price tag increased from 500 billion to 1.7 trillion rupees, and the Diamer-Bhasha Dam’s price tag increased from 480 billion to 1.5 trillion rupees. Allegations of irregularities in these ventures were also highlighted, including mismanagement and hiring unqualified personnel.
Mr. Iqbal stressed that funding shortfalls would result in pared-down investments in important projects and potential delays, further escalating costs. Additionally, reforms in oversight were suggested, including the need for specialized leadership in projects like those under the Water and Power Development Authority (WAPDA).
The focus on development investments will align with the government’s Uraan Pakistan initiative, intended to generate economic opportunities and create around 120,000 jobs. The minister reiterated Pakistan’s commitment to job creation and economic stability despite current financial constraints.
