Pakistan cuts PSDP by Rs 300 bln to meet IMF demand

ISLAMABAD: Pakistan has fulfilled another condition set by the International Monetary Fund (IMF) by slashing the Public Sector Development Program (PSDP) by Rs. 300 billion, ARY News reported.

As per details, the Planning Commission approved new development projects and issued a scorecard that will limit the PSDP for the next fiscal year.

The PSDP will include priority projects, and only 10% of new development projects will be allowed in the next fiscal year. The Planning Commission has also issued guidelines based on the Public Investment Procedure and Parameters.

The federal government will continue to provide financial support for specific regional projects, while subsidies for provincial-type projects under the PSDP will be restricted. The current fiscal year’s allocated PSDP has been reduced by Rs. 300 billion, bringing it down to Rs. 1,100 billion.

Federal ministries and divisions have already limited their use of the PSDP. From July to January, the federal government spent Rs. 220 billion on the development budget.

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The development came after PM Shehbaz Sharif’s meeting with Managing Director of the International Monetary Fund Kristalina Georgieva wherein both sides discussed Pakistan’s ongoing IMF program and the macroeconomic stability achieved through the government’s comprehensive reform agenda.

The meeting held on the sidelines of the World Governments Summit (WGS) 2025 in Dubai, highlighted Pakistan’s commitment to implementing structural reforms and maintaining fiscal discipline, which had been instrumental in restoring economic stability and would be critical in driving sustainable growth, according to a PM Office press release issued Wednesday.

Prime Minister Shehbaz Sharif underscored the progress made under the IMF’s Extended Fund Facility (EFF), which has played a key role in stabilizing Pakistan’s economy; setting it on the path of long-term recovery.

He reaffirmed the government’s resolve to sustain the reform momentum, particularly in critical areas such as tax reform, energy sector efficiency, and private sector development.

He assured the IMF chief of Pakistan’s commitment to economic prudence, efficiency, and sustainability as essential pillars for achieving inclusive and sustained growth.