Govt likely to allocate Rs754 billion for development projects in budget 2026-27

The federal government has prepared various budget estimates for development projects (PSDP) of ministries and provinces in the upcoming budget. The federal government has estimated an allocation of Rs. 754 billion for development projects of various ministries and divisions in the next fiscal year’s budget.

According to sources, a combined Rs. 355 billion has been proposed for the National Highway Authority (NHA) and the Power Division — of which NHA will receive Rs. 264 billion and the Power Division Rs. 91 billion. Similarly, Rs. 179 billion is estimated to be allocated for the Water Resources Division. A sum of Rs. 251 billion has been proposed for development funds of provinces and special areas.

Provincial projects will receive Rs. 99 billion, the merged districts of Khyber Pakhtunkhwa will get Rs. 66 billion, while Azad Jammu & Kashmir and Gilgit-Baltistan will receive Rs. 86 billion. Among other sectors, the Defence Division will receive Rs. 11 billion, the Higher Education Commission Rs. 41 billion, Railways Rs. 28 billion, Planning & Development Rs. 25 billion, the Ministry of Interior Rs. 16 billion, and the Ministry of Information over Rs. 4 billion.

Sources say that Prime Minister Shahbaz Sharif wants to add a further Rs. 200 billion to the federal development budget and has directed the Ministry of Finance to make budget adjustments. However, the Federal Board of Revenue (FBR) has expressed its inability to collect additional revenue, while the IMF has demanded that tax targets be raised further in order to expand the budget.