Barely 58 per cent of the Rs5.903 trillion budget is available for development spending
LAHORE:
The provincial budget faces mounting pressure as the province seeks to fund development priorities while meeting strict IMF requirements. With a Rs910 billion surplus target and a Rs546 billion transfer to the federal government, concerns are growing over the resources available for public services and development projects.
The government has significantly reduced the development budget, leaving little room for major new projects and shifting its focus towards completing ongoing schemes. However, several projects included in the budget have yet to receive approval from the Executive Committee of the National Economic Council (ECNEC), prompting sharp criticism from the opposition, which argues that the budget has procedural shortcomings.
Speaking in the Punjab Assembly, opposition MPA Imtiaz Sheikh accused the government of poor planning, saying projects requiring ECNEC approval had been included without clearance. He also criticised allocations for education and healthcare, arguing that around Rs2.5 trillion would be absorbed by salaries, pensions and the IMF-mandated surplus, leaving limited funds for development.
Reportedly, Punjab’s Rs5.903 trillion budget includes about Rs650 billion for salaries, more than Rs400 billion for pensions and a Rs546 billion transfer to the federal government under the heading “Grant to Federal Government.”
Constitutional experts say Article 160 of the Constitution governs the NFC Award but does not explicitly require provinces to return part of their share to the federal government. The Punjab government says the transfer supports fiscal stability and IMF commitments, while critics argue it will reduce funds available for provincial development and social services.
Under the IMF programme, Punjab must generate a Rs910 billion budget surplus during 2026–27 by keeping revenues above expenditures. Economists warn that if revenue targets are missed, the government may have to slow development spending or delay projects to preserve the required surplus.
Economist Dr Qais Aslam said Punjab is performing better than many other provinces but maintaining such a large surplus will remain a significant challenge. “The government has not introduced new taxes while increasing allocations for education and healthcare and continuing subsidies. However, the province must still identify savings to comply with IMF conditions,” noted Dr Aslam, who also criticised international financial institutions, claiming they do not want Pakistan to achieve stronger economic growth.
Many other experts maintain that, despite increased allocations, spending on education and healthcare remains limited when measured against Punjab’s large and growing population. They argue that higher budget allocations alone will not improve public services unless accompanied by better governance, efficient use of resources, and administrative reforms.
Foreign financing also remains an important source of funding for development projects. However, grants and loans included under Foreign Project Assistance are released only after project milestones are achieved and international lenders approve disbursements, meaning the funds are not immediately available to the provincial treasury.
The government has pledged to continue its austerity policy by reducing unnecessary expenditure, improving financial discipline, and increasing revenues. Economists say meaningful savings will depend on cutting administrative costs, official vehicle expenses, energy consumption, and other non-development spending.
Economic consultant, Khalid Rasool argued that Punjab should place greater emphasis on governance and agriculture since stronger growth depends on increasing the production and per-acre yields of wheat, cotton and sugarcane. “Higher investment in research, technology and higher education is critical,” said Rasool, warning that reduced university funding could weaken long-term economic development.
Economists say 2026–27 will be a critical year for Punjab as it seeks to balance development priorities with IMF commitments and limited financial resources. Success will depend on stronger revenue collection, prudent expenditure management, and the timely completion of development projects while maintaining fiscal stability.
