APCC proposes historic Rs4.083trn outlay

Business Recorder

2 days ago

ISLAMABAD: The Annual Plan Coordination Committee (APCC) on Monday recommended the highest-ever national development outlay of Rs4.083 trillion of the country's history and a GDP growth target of 4.2 percent for the upcoming fiscal year 2025-26 for the approval of the National Economic Council.
The meeting was informed that the proposed National Development Outlay of Rs4.083 trillion for the next fiscal year Rs1 trillion Federal PSDP, Rs288 billion for State-Owned Enterprises (SOEs) investment and Rs2.795 trillion.
The APCC met here under the chairmanship of the Federal Minister for Planning and Development Ahsan Iqbal. It was also attended by senior federal and provincial representatives, including secretaries, principal accounting officers, and planning officials from Gilgit-Baltistan (G-B) and Azad Jammu Kashmir (AJK).
Ministry seeks Rs1.6trn PSDP: FY26 budget on June 2
The session was convened at a critical juncture as Pakistan seeks to navigate significant economic and geopolitical challenges while continuing to implement its long-term development agenda under URAAN Pakistan.
Addressing the participants, the minister emphasized that despite limited fiscal space and competing demands, the government remains fully committed to sustaining development momentum through strategic realignment of resources and policy reforms.
He noted that when the current government assumed office in early 2024, it inherited an economic landscape marked by constrained revenues, pressing foreign obligations, and structural imbalances.
However, with a clear vision and decisive leadership, the Planning Commission mobilised stakeholders around a common development framework—URAAN Pakistan—which aims to transform Pakistan into a $1 trillion economy by 2035 and a $3 trillion economy by 2047. The minister reiterated that the federal government believes that the success of URAAN Pakistan depends on close coordination with provincial governments and the alignment of all tiers of development planning with national priorities.
During the meeting all the provinces appreciated Minister Planning's personal and dedicated efforts for the transparent and collaborative planning process — especially the mechanisms put in place to ensure smooth project implementation and timely fund releases. They gave positive feedback on how streamlined approvals are speeding up development and helping deliver results on the ground. Together, Pakistan is building a more connected, efficient, and prosperous Pakistan.
During the meeting, a detailed review of PSDP 2024–25 was presented. It was noted that the National Economic Council (NEC) had approved a National Development Outlay of Rs3,792.3 billion, which included Rs1,400 billion for the Federal PSDP, Rs2,095.4 billion for Provincial ADPs, and Rs196.9 billion for SOEs.
However, due to financial constraints, the federal PSDP was later reduced to Rs1,100 billion. As of 31st May 2025, Rs1,036 billion had been authorized for release, and Rs 596 billion had been utilized. A total of 1,071 projects were included in the PSDP, with an approved cost of Rs13,427 billion, of which Rs3,216 billion had already been spent by June 2024. A throw-forward liability of Rs. 10,216 billion remains, underscoring the urgent need for project rationalization and financial discipline.
The minister highlighted that there is a dire need to increase the development budget of the country, which has direct bearing on growth and job creation. However, due to fiscal discipline agreed with IMF government is constrained to not increase PSDP.
The only way to increase development spending is to increase the revenues by increasing Tax/GDP ratio from 10 per cent to 16-18 per cent. He said that by being lowest tax paying economy we can't aspire to grow. Every tax paying citizen must become partner of the government in rooting out the menace of tax theft. The government has undertaken number of reforms to overhaul tax administration.
To ensure maximum value for the investment in development sector, the ministry has taken multiple reviews of project performance, including quarterly and mid-year reviews for better investment efficiency. A comprehensive assessment of the ongoing project portfolio was conducted. As a result, over 118 slow-moving or redundant projects, mostly approved at the DDWP level, were recommended for capping or closure, potentially saving Rs1,000 billion and freeing resources for high-impact initiatives.
Moreover, the Planning Commission facilitated re-appropriations of Rs84 billion to fast-moving projects and critical interventions, while Rs80 billion were reallocated through TSGs for emergent national priorities such as the solarisation of tube wells in Balochistan.
Looking ahead to FY 2025–26, the minister announced that the proposed PSDP has been restructured in line with core principles of sustainability, impact, and equity. The Finance Division, after consultations with the IMF, has firmed up an Indicative Budget Ceiling of Rs1,000 billion for the federal PSDP, including Rs270 billion in foreign aid. The PSDP 2025–26 portfolios have been developed following extensive consultations with ministries and provinces through Priority Committee meetings and high-level reviews chaired by the Deputy Prime Minister and Advisor to the Prime Minister.
The final recommendations reflect a strict prioritisation of ongoing high-impact, foreign-aided, and near-completion projects. In total, 1,120 projects have been included in the proposed PSDP, of which a significant number are designed to be completed within the next 3–4 years if fiscal space is maintained. Pakistan faces serious challenge of water security therefore Diamer Bhasha Dam is given top priority. Hyderabad-Sukkur Motorway will be started during 2025-26. Balochistan will get highest share in development funds of nearly Rs250 billion.
Sectoral allocations have been finalised with Rs644 billion allocated to infrastructure, including Rs332 billion for transport and communications and Rs144 billion for energy. Rs150 billion has been proposed for the social sector, including Rs63 billion for education and higher education and Rs22 billion for health.
Special areas like AJK and GB will receive Rs63 billion, while Rs70 billion has been allocated for merged districts of Khyber Pakhtunkhwa. Science and IT sectors have been allocated Rs53 billion, while Rs9 billion has been proposed for governance. Production sectors, including food, agriculture, and industries, will receive Rs11 billion.
In addition, State-Owned Enterprises have submitted development plans amounting to Rs288 billion, with major contributions from entities like WAPDA, NTDC, OGDCL, and others.
The minister informed the participants that one of the most serious challenges has been the increasing tension and security risks following the events of May 7, 2025, when hostilities broke out along the eastern border. This conflict has led to increased defence spending requirements and exerted additional pressure on the already limited development budget.
He candidly acknowledged the dilemma faced by the government: choosing between critical national defense and the developmental needs of the people. However, he reassured participants that the government remains committed to maintaining a careful balance. The minister stated that the strength of a nation lies not just in its defense capabilities, but also in the health, education, and economic empowerment of its citizens.
The government will not allow Pakistan's development journey to be derailed. Instead, it will adopt innovative planning, smart budgeting, and rigorous monitoring to ensure that the needs of both defense and development are addressed.
The APCC also deliberated on critical policy reforms. It endorsed the proposal to stop at-source deduction of Cash Development Loans (CDL) from PSDP funds, as this practice hampers project cash flows and delays implementation. The Committee reiterated the policy that provincial nature projects should be funded by provinces, except in cases involving strategic national interest or implementation in deprived regions.
Furthermore, the APCC recommended imposing a moratorium on DDWP-level project approvals during the tenure of the IMF programme, except in exceptional cases with full justification and review by the CDWP. It was also proposed that no development funds be diverted to recurring expenditures during the fiscal year.
Ahsan Iqbal reiterated the federal government's unwavering resolve to transform adversity into opportunity. He emphasized that Pakistan's current economic path, though challenging, is also full of potential. URAAN Pakistan provides the guiding vision, rooted in five core pillars: Exports, E-Pakistan, Energy and Infrastructure, Environment and Climate Resilience, and Equity, Ethics and Empowerment. Through this framework, the government aims to restore public trust, inspire innovation, and unlock economic potential across all sectors and regions.
He called upon all stakeholders—federal ministries, provincial departments, development partners, and the private sector—to move forward with shared commitment and unity of purpose.
He concluded by stating, 'We are not just managing a budget we are shaping the future. The world may see limitations, but we see opportunities. Our history is full of moments when the Pakistani nation rose above challenges through resolve and resilience. This is one such moment. Together, let us rise and lead Pakistan towards sustainable development, economic dignity, and national pride. URAAN Pakistan is not just a programme—it is the spirit of our national ambition.'
Earlier, talking to journalist Ahsan Iqbal has said that fiscal space will be provided in the next Public Sector Development Program (PSDP) for the projects of strategic importance envisioned under Uraan Pakistan.
The minister mentioned that these projects include Diamer Bhasha Dam, Sukkur Hyderabad motorway project, N-25 in Balochistan and Karakoram highway phase two.
The minister emphasised the need for greater synergy between the development projects of the center and the provinces for early completion of national priority projects. Ahsan Iqbal said that projects with foreign component and those nearing completion have also been prioritised in the PSDP. He said allocations for special regions such as AJK, Gilgit Baltistan and the tribal districts have also been prioritised. He said that an effort has been made to align the development budget with national priorities while staying within limited resources.
Iqbal said that over 118 different projects worth Rs1,000bn were scrapped due to limited resources, adding that the country has to make difficult decisions about limiting the ongoing projects.
Only key projects can be prioritised due to limited funds, the planning minister said, adding that the provincial-level projects should now be completed by the provinces themselves. 'Provinces have far more resources than the federation,' he added. The minister said that everyone must play their part in national development. Shedding light on the upcoming budget, the minister said that the economic size target for next year had been set at Rs129 trillion. 'This year's development budget has been set at Rs1,000 billion,' he added.
The minister said that Rs150bn had been allocated for the social sector and Rs70bn for KP's merged districts in the next budget. 'GDP growth target for the next fiscal year was set at 4.2%,' Iqbal said, adding that the target for exports was set at $35bn.
Earlier, giving a blueprint of the annual PSDP for the next fiscal year at the APCC meeting, he said that fiscal space will be provided in the next PSDP for the projects of strategic importance envisioned under Uraan Pakistan. He mentioned that these projects include the Diamer Bhasha Dam, Sukkur Hyderabad motorway project, N-25 in Balochistan and Karakoram highway phase two.
The minister emphasised the need for greater synergy between the development projects of the Centre and the provinces for the early completion of national priority projects. He said that projects with a foreign component and those nearing completion have also been prioritised in the PSDP. The minister elaborated that the said allocations for special regions such as AJK, Gilgit-Baltistan and the tribal districts have also been prioritised. The minister further said that an effort has been made to align the development budget with national priorities while staying within limited resources.
Copyright Business Recorder, 2025