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Punjab’s budget for development is almost 33% higher than the national development budget.
BY Mahnoor | 02-06-2026
ISLAMABAD: On Monday, the federal government approved a 4.3 trillion rupee national development plan for the new year. Most of this money, about 75%, will be paid by the provinces. This includes 87 billion rupees set aside for expenses that Planning Minister Ahsan Iqbal described as the ‘cost of a coalition government’.
The Annual Plan Coordination Committee (APCC) has suggested a total national development budget of Rs4.264 trillion for the 2026-27 fiscal year. This plan now needs final approval from the National Economic Council (NEC).
Prime Minister Shehbaz Sharif will lead the NEC meeting tomorrow to approve the budget.
Sources say the prime minister has asked the finance ministry to find an extra Rs200 billion for the government’s development plan, which is currently set at Rs1.126 trillion.
Speaking to the media, Iqbal noted that after paying for set costs in different sectors and projects, the Rs1.126 trillion budget actually has a Rs15 billion deficit.
Sources say the finance ministry is reluctant to increase the proposed development budget because of rules set by the IMF. A final decision is expected by Wednesday.
To find more money, the government could either raise tax collection targets or cut spending in other areas.
Led by Iqbal, the APCC suggested a federal development budget (PSDP) of Rs1.126 trillion. This includes Rs267 billion in foreign aid and is 35% higher than this year’s smaller budget. However, the minister complained that this budget is still too low to cover the costs of current projects.
The APCC also suggested provincial development plans for next year, totaling Rs3.138 trillion. This includes Rs660 billion in foreign aid and is 2.5% more than this year’s budget of just over Rs3 trillion.
Since the 18th amendment, provinces control most resources. However, the federal government is still paying for provincial projects using its own budget, even though it is not required to do so. This also breaks the National Fiscal Pact, which was signed as part of the IMF agreement.
Iqbal stated that the federal government will spend Rs87 billion on projects suggested by their coalition partner.
He added that this amount is the price of maintaining the coalition government.
The Rs87 billion is nearly the same as the total budget for Pakistan’s three vital dams: Dasu, Diamer Basha, and Mohmand. However, this amount is much less than what these dams actually need. The plan suggests giving Rs25 billion each to the Dasu and Diamer Basha dams, and Rs39 billion to the Mohmand Dam.
The minister said that because of budget limits, the 2026-27 development plan must focus on important, ongoing national projects that can boost economic growth.
Iqbal stated that different ministries requested more than Rs4.1 trillion. The planning ministry asked the finance ministry to provide at least Rs2.9 trillion just to finish current projects.
Iqbal stated that the cost to finish current projects has risen to over Rs10.8 trillion. At the current spending rate, it will take more than ten years to finish them, even without starting new ones.
Despite having very little money, the federal government set aside a small amount of Rs250 million for the Rs263 billion Lahore-Bahawalnagar motorway. Sindh province has objected to including this Punjab motorway in the federal budget.
The planning minister stated that more than 90% of projects are going over budget and missing deadlines. There is a huge need for local currency to fund international projects.
The minister noted that for next year, ministries asked for Rs1.1 trillion, and even after cutting requests, they still needed Rs426 billion. However, only Rs267 billion was actually provided.
Economic Affairs Minister Ahad Khan Cheema attended the APCC meeting.
Iqbal noted that the Planning Commission is struggling because the development budget is getting smaller while needs are increasing, which has upset many people.
The federal government gave Rs87 billion for projects suggested by coalition partners. It also set aside Rs70 billion to give Rs500 million to small local projects for every government-aligned member of the National Assembly.
According to the APCC, Punjab will spend Rs1.45 trillion on development next year, a 7% increase from this year. Punjab’s development budget is almost one-third larger than the federal government’s development budget.
Sindh will spend Rs816 billion on development, which is Rs29 billion less than last year. Khyber-Pakhtunkhwa plans to spend Rs564 billion, an increase of Rs63 billion. Balochistan’s new development budget is Rs308 billion, which is Rs53 billion less than this year.
Iqbal stated that the National Highway Authority asked for Rs1.4 trillion for the next year, but will only receive Rs264 billion. For the Sukkur-Hyderabad Motorway, only Rs20 billion was suggested despite a request for Rs122 billion.
The minister added that the Karakoram Highway needs Rs80 billion, but very little funding is being provided.
Even though the government called water a ‘security challenge’ needing Rs970 billion next year, they only set aside Rs140 billion. In another part of the plan, the amount for water is listed as Rs179 billion.
Iqbal noted that because of economic and energy problems, the Finance Division cut last year’s budget twice, reducing it by Rs173 billion to a total of Rs837 billion.
