Pakistan Reduces Development Budget Again as Funds Shift Toward Petrol Subsidy

Pakistan’s economic policy has seen another significant adjustment as the government has decided to further cut development spending to allocate additional resources for petrol subsidies.

According to official sources, the federal government has approved an additional Rs63 billion reduction in the development budget, bringing the total cuts to Rs163 billion. Following this revision, the size of the Public Sector Development Programme has been reduced to Rs837 billion for the current fiscal year.

Earlier, Rs100 billion had already been slashed from the development budget last month to meet financial requirements related to fuel subsidies, indicating a phased fiscal adjustment strategy.

Sources further revealed that the cuts have significantly impacted provincial development programs and special areas, where overall allocations have decreased by nearly 20 percent. Water resource projects and funding for the National Highway Authority have also reportedly seen reductions of more than 17 percent.

Originally, the federal development budget was set at Rs1 trillion for the current fiscal year, but repeated revisions have substantially reduced its size amid ongoing fiscal pressures.