Pakistan PSDP Budget Cut Reduced by Rs173 Billion

Pakistan has announced a major PSDP budget cut of Rs173 billion. The move reduces the development budget to Rs837 billion. As a result, the government aims to manage fiscal pressure and meet IMF targets.
Officials confirmed that authorities applied the cuts in two phases. First, they reduced Rs100 billion in March. Then, they implemented another Rs73 billion cut last week.
The government made this decision to offset the impact of Middle East tensions. Therefore, it hopes to maintain the agreed primary budget surplus target.

Major Cuts Across Key Sectors

The government reduced budgets across most ministries. However, it applied cuts proportionally to manage the impact.
The National Highway Authority faced the largest reduction. Its budget dropped by Rs38 billion to Rs185 billion. Meanwhile, the water sector also saw major cuts.
Authorities reduced water project funding by Rs23 billion. In addition, they cut the Water Resources Division budget significantly. Spending in this sector has remained slow.
The government also reduced allocations for provinces and power projects. Similarly, it cut funding for education, health, and higher education sectors. These reductions may affect long-term development goals.

IMF Pressure and Policy Concerns

Pakistan aims to maintain a primary surplus under its IMF programme. However, experts remain cautious about meeting this target.
Finance Minister Muhammad Aurangzeb recently met IMF officials. He expressed hope for early approval of a $1.2 billion loan tranche. Still, uncertainty remains about the final decision.
Planning Minister Ahsan Iqbal criticized the cuts. He argued that the government should control current spending instead. In addition, he called for better revenue collection.
Despite the PSDP budget cut, some projects remain protected. These include parliamentarian schemes and flood rehabilitation efforts.
In conclusion, the government faces tough choices to balance development and fiscal discipline.