More debt, less development? Pakistan spends just 10% of annual budget

Surplus on paper, slow progress on ground: Pakistan's development spending lags (Reuters file photo)

Pakistan has spent barely 10.4% of its annual development budget in the first four months of the current fiscal year, despite posting a budget surplus in the first quarter, raising concerns over delays in public-interest projects and their impact on economic growth and living standards.According to data released by Pakistan's ministry of planning and development, total expenditure under the Public Sector Development Programme (PSDP) between July and October stood at PKR 103.87 billion against an annual allocation of PKR 1 trillion, Dawn reported.Excluding corporations, around 33 ministries and divisions spent just PKR 74.65 billion, or about 11% of their total allocation of PKR 682 billion.

Corporations, mainly in the power sector and the National Highways Authority, spent another PKR 29 billion, amounting to 9.3% of their annual allocation of PKR 313 billion.The slow pace of development spending comes even as Pakistan recorded a budget surplus of 0.8% in the first quarter of the fiscal year.Under the spending mechanism announced by the finance ministry, the Shehbaz Sharif government is expected to release 15% of the annual development allocation in the first quarter, 20% in the second, 25% in the third and the remaining amount in the final quarter. The arrangement is intended to ensure that any shortfall in revenue collection can be managed through cuts in development spending while meeting fiscal targets agreed with the International Monetary Fund (IMF).

Meanwhile, Pakistan's dependence on foreign borrowing continues to grow. Its external debt nearly doubled over the past decade, rising from $68.67 billion in 2015 to $135.1 billion in 2025, according to a

World Bank

report cited by Dawn.The debt stock included $107.07 billion in public and publicly guaranteed loans, $17.58 billion in private non-guaranteed debt and $10.45 billion in short-term borrowing.Multilateral institutions accounted for the largest share of public debt at $56.83 billion, followed by bilateral lenders at $42.43 billion and private creditors at $7.8 billion. China was Pakistan's largest individual creditor, with outstanding loans of $22.4 billion, followed by the World Bank at $19.2 billion and the Asian Development Bank at $16.83 billion.