Pakistan unveils Rs3.67tr development budget for 2026-27

June 12, 2026 (MLN): The Government of Pakistan released its Public Sector Development Programme (PSDP) for fiscal year 2026-27, announcing a landmark national development outlay of Rs 3,675 billion.

This reflected the government's continued commitment to accelerating economic growth despite fiscal constraints.

The programme, prepared by the Planning Commission under the Ministry of Planning, Development & Special Initiatives, was approved by the National Economic Council (NEC) and is anchored around the government's flagship URAAN Pakistan vision and its 5Es strategy, Exports, E-Pakistan, Environment, Energy & Infrastructure, and Equity & Empowerment.

Federal PSDP Set at Rs 1,000 Billion

The Federal PSDP has been fixed at Rs 1,000 billion, comprising Rs 255 billion in rupee cover and Rs 745 billion in local financing.

Provincial Annual Development Programs (ADPs) account for an additional Rs 2,224 billion, while State-Owned Enterprises (SOEs) are expected to contribute Rs 451 billion in development spending, bringing the total national outlay to Rs 3,675 billion.

Secretary Planning Awais Manzur Sumra, in his preface to the document, emphasized that the PSDP has been formulated in a resource-constrained environment, with strict controls placed on the inclusion of new schemes to ensure completion of ongoing critical projects.

Infrastructure Gets Lion's Share

Infrastructure development dominates the PSDP, with the National Highway Authority (NHA) receiving the single largest corporate allocation of Rs 224.5 billion.

Major road projects include the dualization of the Karachi-Quetta-Chaman corridor (N-25), the Hyderabad-Sukkur 6-lane Motorway on a Build-Operate-Transfer (BOT) basis with a total cost of Rs 363.7 billion, and multiple highway upgradation projects across Balochistan, Khyber Pakhtunkhwa, and Punjab.

The Water Resources Division has been allocated Rs 103 billion, the largest among federal ministries, reflecting the government's focus on water security.

Flagship projects include the Diamer Basha Dam (total cost Rs 479.7 billion), the Mohmand Dam (Rs 309.6 billion), and the Greater Karachi Bulk Water Supply Scheme (K-IV).

Railways Sees Massive Uplift

The Railways Division has been allocated Rs 40.7 billion, with the centerpiece being the long-awaited Main Line-1 (ML-1) Upgradation project under CPEC, carrying a staggering total cost of Rs 1,923 billion.

Additional allocations cover track safety works, locomotive rehabilitation, and procurement of high-capacity wagons and passenger coaches.

Energy Sector Remains a Priority

The Power Division has been allocated Rs 88 billion for NTDC and PEPCO projects, focusing on grid expansion, transmission infrastructure, and distribution efficiency.

Key projects include the Dasu Hydropower Project Stage-I (total cost Rs 1,737 billion), the CASA-1000 Central Asia-South Asia Power Interconnection, and multiple ADB and World Bank-funded distribution improvement projects.

Renewable energy also features prominently, with investments in solar photovoltaic plants in Gilgit-Baltistan, battery energy storage systems, and wind power evacuation infrastructure.

Education and Youth at the Forefront

The Federal Education & Professional Training Division has been allocated Rs 36.3 billion, with a significant push for the expansion of Daanish Schools across Balochistan, Azad Jammu & Kashmir, Gilgit-Baltistan, Khyber Pakhtunkhwa, and Sindh, a flagship equity initiative targeting underprivileged children.

The Higher Education Commission (HEC) receives Rs 46 billion, the highest-ever allocation, supporting university development, overseas scholarships, PhD fellowships, and cutting-edge research centers including a National Centre of Quantum Computing and a National Centre for Nanoscience and Nanotechnology.

A dedicated Prime Minister's Youth Program, with an allocation of Rs 18.1 billion, spans skill development, IT startups, innovation awards, sports leagues, and e-sports arenas at universities.

Technology and Space: A New Frontier

In a significant step toward digital transformation, the IT & Telecommunication Division has been allocated Rs 19.6 billion, with major investments in the National AI Ecosystem Development Program (Rs 13 billion), the IT Park Karachi (Rs 31.2 billion total cost), and a National Semiconductor HR Development Program.

Pakistan's space ambitions are also on display, with SUPARCO receiving Rs 4.9 billion for projects including the Pakistan Manned Space Mission, the Pakistan Optical Remote Sensing Satellite (PRSS-O2), and the Pakistan Multi-Mission Communication Satellite (PakSat-MM1).

Special Areas and Equity

Recognizing the development needs of marginalized regions, the government has earmarked substantial funds for Azad Jammu & Kashmir (Rs 45 billion), Gilgit-Baltistan (Rs 44 billion), and the Merged Districts of Khyber Pakhtunkhwa (Rs 56 billion).

These allocations support regional Annual Development Programs formulated according to local priorities.

Health and Social Protection

The National Health Services Division has been allocated Rs 16 billion, covering major projects such as the Jinnah Medical Complex & Research Center, the PM National Program for Elimination of Hepatitis C, the National Program for Prevention of Diabetes, and the establishment of an Infectious Disease Laboratory.

CPEC 2.0 Launched

In a notable new development, the government has introduced CPEC 2.0 as a fresh initiative with an initial allocation of Rs 1 billion, signaling a renewed push to deepen economic cooperation with China under the second phase of the China-Pakistan Economic Corridor.

Looking Ahead

Commenting on the PSDP, Minister for Planning Professor Ahsan Iqbal underscored the government's determination to pursue development within fiscal discipline, focusing on high-impact projects that generate employment, boost exports, and deliver social equity.

The PSDP 2026-27 represents not just a budget document, but a strategic roadmap for Pakistan's economic transformation, balancing the imperatives of fiscal prudence with the aspirations of a nation striving for sustainable and inclusive growth.

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