By Farooq Awan

Pakistan’s Public Sector Development Programme (PSDP) is facing mounting financial pressure as the cost of completing approved projects continues to rise far beyond the resources available for development spending, prompting the Planning Ministry to warn that the programme is becoming a “new circular debt crisis.”

According to a presentation prepared for the Annual Plan Coordination Committee (APCC), the federal development portfolio’s throw-forward — the amount required to complete ongoing projects — has climbed to Rs10.818 trillion in FY2025-26.

The document shows that the throw-forward stood at Rs8.2 trillion at the beginning of the fiscal year but increased significantly following revisions and expected revisions to the costs of major projects, including Diamer Bhasha Dam, Dasu Hydropower Project, Mohmand Dam and Tarbela 5th Extension.

Official figures indicate that throw-forward has risen steadily over the years. It increased from Rs3.245 trillion in FY2013-14 to Rs4.847 trillion in FY2014-15 and reached Rs5.812 trillion in FY2017-18. After fluctuating in subsequent years, it climbed to Rs7.879 trillion in FY2022-23, Rs8.701 trillion in FY2023-24 and Rs10.145 trillion in FY2024-25 before reaching the current level of Rs10.818 trillion.

The presentation highlights a widening gap between project commitments and available resources. It estimates that ongoing projects alone require Rs3.377 trillion in FY2026-27. However, the Indicative Budget Ceiling communicated by the Finance Division stands at only Rs1.126 trillion.

The document further reveals that the development portfolio includes projects with a total cost of Rs15.865 trillion. Of these, 786 projects are currently under implementation, carrying a combined throw-forward of Rs10.818 trillion.

Under the Planning Ministry’s “Rockfill Strategy,” 197 large projects categorised as “Rocks” account for Rs10.065 trillion of the total throw-forward. These projects alone received 81% of PSDP allocations during FY2025-26 and require Rs2.95 trillion in FY2026-27.

The presentation notes that several mandatory commitments will absorb a significant portion of available development resources next year. These include allocations for the N-25 highway project, Balochistan-specific schemes, projects in Azad Jammu and Kashmir, Gilgit-Baltistan and merged districts, coalition commitments and Sustainable Development Goals (SDGs) programmes.

It also points to substantial financing requirements for foreign-funded projects. While external assistance supports project implementation, the government must arrange corresponding rupee-cover financing, further increasing pressure on limited PSDP resources.

According to the document, after accounting for major commitments and rationalised rupee-cover requirements, only a limited amount remains available for other ongoing development projects.

The Planning Ministry concludes its presentation by warning that the growing imbalance between development obligations and financing capacity is turning the PSDP into a “new circular debt crisis,” underscoring the challenge of sustaining an expanding portfolio of public-sector projects under constrained fiscal conditions.

Credit: INP-WealthPk