Every year, it feels like the same story in Pakistan’s budget battles. When money gets tight, the government reaches for the easiest lever: slowing down spending on roads, schools, hospitals, and other projects that are supposed to improve people’s lives.
The numbers for the first five months of this fiscal year tell a familiar tale—only 9.2% of the trillion-rupee federal development budget has been spent by the end of November. That’s not just a slow start; it’s a deliberate choice to hold back funds in order to look fiscally responsible, especially in the eyes of the International Monetary Fund (IMF).
For ordinary Pakistanis, this means promises of better infrastructure, more jobs, and stronger public services keep getting pushed further down the road. The government talks about economic stability, but the reality on the ground is that growth and development are being put on hold to plug holes in the budget caused by missed tax targets and uncontrolled day-to-day spending. It raises a difficult question: can we really achieve long-term prosperity if we keep treating development as something we can afford to delay?
The federal government set aside Rs1 trillion for development this year—money meant for everything from highways and power plants to irrigation schemes and social programs. Yet, five months in, barely a tenth of it has been used. That’s even lower than the same period last year, which is worrying because it shows the squeeze is getting tighter, not easier.
Officials have tried to explain this away by blaming lower spending in the provinces, special areas, and even the railways. But that doesn’t hold much water. The real throttle is coming from the centre itself. With a massive Rs430 billion shortfall in tax collection and little progress in cutting wasteful current spending—like generous allowances, overlapping ministries, and inefficient state enterprises—the federal government is pulling back on both its own projects and those it funds in the provinces.
The main goal here is to deliver the primary surplus the IMF is asking for—a measure of how much revenue exceeds spending before interest payments. In the first quarter, that surplus hit 1.6% of GDP, but it didn’t come from smart cost-cutting alone. A big chunk came from one-off profits transferred from the State Bank and a sharp increase in the petroleum levy, which quietly raises fuel prices for everyone.
What’s even more concerning is what the government has quietly promised the IMF: if tax revenues keep falling short, major development spending will be postponed until the very last quarter of the fiscal year—potentially even into FY26. In simple terms, development becomes whatever is left over after everything else is paid for. It stops being a priority and turns into a leftover.
Delaying development projects isn’t just an accounting trick—it has real consequences. When funds for a new hospital or school are frozen, patients and students feel it immediately. When a road or bridge isn’t built on time, farmers struggle to get their produce to market, businesses face higher costs, and entire communities stay cut off. In a country where unemployment is high and regional inequalities are stark, these delays slow down job creation and deepen poverty, especially in less-developed areas like parts of Balochistan, rural Sindh, and Khyber Pakhtunkhwa.
It also sends a discouraging signal. Investors—both local and foreign—look for reliable infrastructure and public services before committing money. When projects keep getting deferred, confidence erodes, and the economy grows more slowly than it could. Pakistan already has one of the lowest tax-to-GDP ratios in the region, and instead of fixing that structural problem, we keep leaning on the same short-term fixes: squeeze development, raise indirect taxes, hope for a bailout.
The good news is that this doesn’t have to be the only path. Pakistan has plenty of room to cut non-essential current spending without touching development. The federal cabinet is large and expensive. There are dozens of overlapping institutions and generous perks that could be trimmed. Subsidies that mostly benefit the well-off could be better targeted. Simply putting a stop to wasteful procurement and ghost projects would free up billions.
But these reforms require political courage. They mean taking on powerful interests—bureaucrats, politicians, and connected businesses—who benefit from the status quo. Successive governments, including the current one, have talked a good game about austerity and reform but have done remarkably little when it comes to their own privileges. Instead, the burden keeps falling on ordinary citizens through higher taxes on fuel and utilities and on the future through delayed development.
What Pakistan really needs is a clear, long-term growth strategy that treats fiscal discipline as a means to an end—not the end itself. Countries like Bangladesh and Vietnam have shown it’s possible to maintain IMF-supported programs while still investing heavily in infrastructure and human development. They broadened their tax bases gradually, improved governance, and kept their focus on exports and jobs. Pakistan could do the same if leaders were willing to think beyond the next review meeting with the Fund.
Right now, Pakistan is walking a fiscal tightrope, and development spending is the safety net being pulled away to keep the performer balanced. The low utilization rates, reliance on one-off revenues, and the willingness to postpone projects all point to the same underlying issues: a narrow tax net, uncontrolled current spending, and a lack of political will for deeper reforms.
Meeting IMF targets is important—but it shouldn’t come at the cost of sacrificing the very investments that will make those targets easier to meet in the future. Citizens deserve leaders who can deliver stability without constantly putting growth on hold. Until the government shows the resolve to cut waste, widen the tax base fairly, and protect development spending, we’ll keep seeing the same cycle repeat: promises made in the budget speech, quietly deferred when the bills come due. It’s time to choose a different path—one where fiscal responsibility and development go hand in hand, not one at the expense of the other.