Planning ministry opposes finance ministry’s PSDP fund release strategy

ISLAMABAD: The Ministry of Planning has raised objections to the Finance Ministry’s strategy for releasing funds under the Public Sector Development Program (PSDP), urging a more balanced disbursement across the fiscal year rather than concentrating 40% of allocations in the final quarter (April–June) of FY2025-26.

Planning Minister Ahsan Iqbal, speaking at the launch of the Monthly Development Update on Tuesday, proposed an alternative schedule — 25% in the second quarter, 30% in the third, and 30% in the fourth quarter — to improve fund utilization.

Under the current Finance Ministry plan, PSDP funds are released at 15% in the first quarter, 20% in the second, 25% in the third, and 40% in the fourth. Sources say the strategy was developed in consultation with the IMF, taking into account fiscal space and revenue trends, with lower early-year revenue cited as the reason for smaller initial disbursements.

The minister highlighted recent economic gains, including reduced import duties on raw materials, improved market access to the US, and Pakistan’s competitive tariff advantage in South Asia. He reported that Rs1.068 trillion in development funds were utilized last year, inflation fell to 4.1% in July from 11% a year earlier, and the Pakistan Stock Exchange ranked among the world’s top-performing markets.

Key indicators for 2025 show higher GDP growth, lower inflation, a 17% rise in July exports, a 7.5% increase in remittances to $3.2 billion, and a $2.1 billion current account surplus in FY2024-25. Pakistan also posted its first primary balance surplus in 24 years.