Pakistan's Development Spending Falls Short of Target, Threatening Economic Growth

Strategic Insights -

Pakistan's government spent a total of Rs905 billion on development projects in the fiscal year 2024-25, which is significantly lower than the revised target of Rs1.1 trillion. This shortfall has raised concerns that the country's economic growth rate may be revised downward from the projected 2.7%. The government had originally set the Public Sector Development Programme (PSDP) at Rs1.4 trillion but reduced it to Rs1.1 trillion, yet the actual spending still fell short of this revised target. The bulk of the spending occurred in the last two months of the fiscal year, with Rs456 billion spent in May and June, indicating inefficiencies in the budget release process.

Key Takeaways:

  • Pakistan's government spent Rs905 billion on development projects in the fiscal year 2024-25, falling short of the revised target of Rs1.1 trillion.
  • The government had originally set the Public Sector Development Programme (PSDP) at Rs1.4 trillion, later reducing it to Rs1.1 trillion, but actual spending still remained below the revised target.
  • Provisional figures show that the bulk of the spending, Rs456 billion, occurred in the last two months of the fiscal year (May-June).
  • The government's growth projections were based on the assumption that the full Rs1.1 trillion would be spent, but actual spending falling short may affect the economic growth calculations.
  • Key areas of spending included Rs60.5 billion on parliamentarians' schemes, Rs69.5 billion on provincial projects, and Rs64 billion on schemes in the merged areas of Khyber Pakhtunkhwa.
  • Sectors such as higher education, water resources, and infrastructure saw budget allocations fall short of original targets, with the Ministry of Water Resources receiving Rs154 billion against an allocation of Rs195 billion, and the National Highway Authority spending Rs144 billion instead of the planned Rs161 billion.

Statistics:

  • Pakistan's government spent Rs905 billion on development projects in the fiscal year 2024-25.
  • The government's revised target for the Public Sector Development Programme (PSDP) was Rs1.1 trillion.
  • Provisional figures show that Rs456 billion was spent in the last two months of the fiscal year (May-June).
  • The government's growth projections were based on the assumption that the full Rs1.1 trillion would be spent.
  • Breakdown of spending:

+ Parliamentarians' schemes: Rs60.5 billion

+ Provincial projects: Rs69.5 billion

+ Schemes in the merged areas of Khyber Pakhtunkhwa: Rs64 billion

+ Ministry of Water Resources: Rs154 billion (against an allocation of Rs195 billion)

+ National Highway Authority: Rs144 billion (against a planned expenditure of Rs161 billion)

Sources:

  • "Pakistan's development spending falls short of target, threatening economic growth" (news report)
  • Pakistan Bureau of Statistics (PBS)
  • Pakistan Ministry of Planning and Development
  • Accountant General Pakistan Revenues (AGPR)
  • International Monetary Fund (IMF)