ISLAMABAD: Pakistan’s coalition partners Pakistan Muslim League-Nawaz (PML-N) and Pakistan Peoples Party (PPP) have agreed on cuts to the Public Sector Development Programme (PSDP), paving the way for the approval of the federal budget for 2026–27, officials said on Wednesday.
Following a meeting between the leadership of both parties, it was agreed to reduce development spending at the federal and provincial levels, helping streamline the budget process.
President Asif Ali Zardari approved summoning sessions of the National Assembly at 5 p.m. and the Senate at 4 p.m. today, officials said.
According to sources, the federal government has reduced the proposed PSDP by Rs 126 billion, while additional cuts are expected across provincial development programs except in Balochistan.
The adjustments are expected to generate around Rs 500 billion in savings, which will be redirected toward strategically important projects, including major water and energy schemes such as Diamer-Bhasha, Mohmand, and Dasu dams.
Officials said the federal government had initially sought nearly Rs 1.2 trillion in additional fiscal space from provinces, but revised arrangements are now under consideration. Balochistan’s development program will remain unchanged due to its revised allocation of Rs 308 billion.
Sources said the National Economic Council meeting, chaired by Prime Minister Shehbaz Sharif, will finalize key decisions regarding the PSDP size and broader budget framework. The federal budget for 2026–27 is expected to be presented after approval from cabinet and parliamentary forums.
The government is also considering adjustments in provincial shares, defense spending requirements, and potential relief measures for salaried individuals and the corporate sector, depending on fiscal space.