Federal Minister for Planning, Development, and Special Initiatives Ahsan Iqbal on Monday said the government will have to prioritise high-value projects, as only Rs880 billion has been allocated for development in the upcoming budget for the fiscal year 2025-26.

The government has adopted austerity measures for the upcoming budget — set to be announced on June 10 — in line with the demands of the International Monetary Fund (IMF) to implement stricter spending policies and raise revenues to reduce the budget deficit and improve debt sustainability, as part of its $7 billion loan programme. The global money lender also expects Pakistan to achieve a 3.6 per cent economic growth with 7.7pc inflation next year.

Speaking to reporters in Islamabad after a meeting of the Annual Plan Coordination Committee, the planning minister noted that since 2023, the development budget had decreased, stating that Pakistan was observing “tight financial discipline in order to balance spending and income” — a process he said had been agreed upon with the IMF.

“Pakistan has faced such severe inflation that the federal government would end up spending the money it collected from the provincial governments to pay off loans,” he explained.

“The reason we have these debts is because the govt in power between 2018 and 2022 took multiple loans and the policy rate rose to 23pc due to heavy inflation,” Iqbal added. “Repaying those loans became 55pc of our spending. As a result, this has affected our development budget.”

“Since resources are limited, we need to focus on high-priority projects for national development. We need to ensure ‘value for money’ in selecting projects.

“Efficiency and prioritisation of investment are two important pillars to fulfil lack of resources,” the federal minister said earlier while addressing the committee meeting.

He said that fiscal space will be provided in the next

© Dawn Business