PM Shehbaz rejects Rs1.126tr PSDP allocation, directs Rs200bn increase
- By Shoaib Nizami -
- Jun 02, 2026
ISLAMABAD: Prime Minister Shehbaz Sharif has termed the proposed Rs1.126 trillion allocation for the federal Public Sector Development Programme (PSDP) insufficient and directed authorities to increase it by Rs200 billion, sources said on Tuesday.
The directive came after Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal announced on Monday that the Ministry of Finance had allocated Rs1.126 trillion for the PSDP in the fiscal year 2026-27.
According to sources, PM Shehbaz has instructed the Ministry of Finance and the Ministry of Planning to expedite efforts to arrange an additional Rs200 billion for development spending.
A meeting of the National Economic Council (NEC), the country’s highest economic policy making forum, is scheduled to be held on June 3.
Sources said the federal development budget presented before the NEC is now expected to be increased from Rs1.126 trillion to Rs1.326 trillion.
The government will also inform the International Monetary Fund (IMF) about the proposed increase in development spending.
The prime minister has further directed the Ministry of Finance and the Federal Board of Revenue (FBR) to explore options for generating an additional Rs200 billion in revenue.
However, sources said the Ministry of Finance and the FBR have expressed reservations about increasing the proposed tax collection target from Rs15.264 trillion to Rs15.464 trillion.
Instead, both institutions are working on alternative fiscal measures to create room for the additional development expenditure.
The NEC is expected to consider a total national development outlay of Rs4.464 trillion for the next fiscal year, including Rs1.326 trillion for the federal PSDP and Rs3.138 trillion for provincial development programmes.
Read More: Finance ministry allocates Rs1.126 trillion for PSDP 2026-27
Sources said the proposed provincial development allocations include Rs1.45 trillion for Punjab, Rs816 billion for Sindh, Rs564 billion for Khyber Pakhtunkhwa and Rs308 billion for Balochistan.
The NEC meeting will be attended by the chief ministers and finance ministers of all four provinces, as well as the prime minister of Azad Jammu and Kashmir.