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Pakistan’s development budget is significantly impacted by the IMF program

Pakistan's development budget is significantly impacted by the IMF program

The development budget in Pakistan has undergone significant reductions due to the demands of the International Monetary Fund (IMF) program, resulting in substantial cuts to funding for essential social sector and infrastructure projects.

Initially set at Rs 950 billion for the current year, the development budget has been significantly slashed, with only Rs 389 billion being utilized. These cuts have had far-reaching effects across various sectors, including health and higher education, impeding the progress of vital projects crucial for the country’s development.

Official documents indicate that the Public Sector Development Program (PSDP) requires Rs 9,800 billion to support ongoing projects. However, only Rs 1,221 billion have been proposed for the federal PSDP in the next financial year, indicating a substantial shortfall.

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Over the past decade, the average federal development budget has hovered around Rs 630 billion annually. However, economic constraints have compelled the government to curtail development spending to meet IMF targets.

The depreciation of the rupee and escalating inflation have compounded the budgetary pressures, making it challenging for the government to allocate adequate funds to development initiatives. Additionally, the federal government has cited provincial projects as imposing a significant burden on the budget, exacerbating the strain on already limited development funds.

According to the documents, the development budget has dwindled to 0.9 percent of GDP from 1.7 percent, underscoring the severe repercussions of budget cuts on Pakistan’s overall economic growth and development.