The Annual Plan Coordination Committee (APCC) on Monday recommended the highest-ever national development outlay of Rs4.715 trillion and a GDP growth target of 4 percent for the upcoming fiscal year 2026-27. The committee met under the chairmanship of Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal to review the progress of the Public Sector Development Programme (PSDP)/Annual Plan 2025–26 and finalize recommendations for the upcoming PSDP/annual plan 2026–27.
Key Recommendations and Allocations
The APCC recommended a national development outlay of Rs4.715 trillion for 2026-27 for consideration by the National Economic Council (NEC). This includes a Federal PSDP of Rs1.126 trillion, Provincial ADPs of Rs3.138 trillion, and SOEs’ investment of Rs451 billion. The committee decided that more than 98% of available resources will be directed toward ongoing projects, with priority accorded to high-impact and near-completion schemes, especially in water, energy, transport, and other core infrastructure sectors.
PSDP Demands and Constraints
The meeting was informed that ministries/divisions demanded Rs4.1 trillion for PSDP 2026-27, including Rs1,126 billion for foreign-aided projects. The demand for ongoing projects is Rs3.3 trillion, including Rs1.8 trillion for mega/core projects such as ML-I, Diamer Bhasha, Dasu, Mohmand Dams, Thar Connectivity, and others. The Economic Affairs Division (EAD) indicated a demand for rupee cover of Rs426 billion based on disbursement estimates for the next fiscal year. The APCC expressed concern that the Indicative Budget Ceiling (IBC) of Rs1.126 trillion issued by the Finance Division for PSDP 2026-27 is only 27% of the funds demanded by the ministries, 38% of the rationalized demand worked out by the Ministry of Planning, Development and Special Initiatives, and around 11% of the throw-forward of ongoing projects. The ongoing portfolio requires ten years to complete due to the inadequate size of the PSDP against the huge throw-forward.
Historical Context and Ministerial Remarks
While sharing an overview, the minister noted that Pakistan’s PSDP experienced its strongest momentum during the 2013-2018 period, when development spending reached its high-water mark and played a vital role in accelerating growth, connectivity, and investor confidence. He pointed out that in 2017-18, PSDP stood at 19.6% of the national budget and 2.5% of GDP, whereas by 2025-26 it had fallen to just 4.0% of the budget and 0.6% of GDP. The committee was informed that in the previous fiscal cycle, the size of PSDP 2025-26 was fixed at Rs1,000 billion against a total demand of Rs3,200 billion. The size was further reduced to Rs837 billion after enforcing two cuts due to economic shocks and subsidizing energy price differentials. The Ministry of Planning, Development and Special Initiatives authorized Rs835 billion to the respective ministries/divisions for July-June 2026 as per the quarterly release strategy notified by the Finance Division for PSDP funds, against which Rs529 billion had been utilized by sponsors as of June 1, 2026.
Ahsan Iqbal stated that the throw-forward crossed Rs10,000 billion, and the Finance Division indicated an IBC of Rs1,126 billion against the demand of Rs4,100 billion. Furthermore, the Deputy Chairman Planning Commission (DCPC)/Minister for PD&SI highlighted that the federal PSDP has remained stagnant over the period. On the other hand, provincial ADPs have been substantially increased and touched Rs3 trillion outlay. Given the resource constraints, there is no room for inclusion of new projects in PSDP 2026-27.
Project Classification and Sectoral Allocation
The chair classified the projects included in PSDP 2026-27, mentioning that 197 projects costing Rs14,687 billion have been approved by ECNEC, 335 projects costing Rs1,045 billion have been approved by CDWP, and 254 projects costing Rs133 billion have been approved by DDWP. The chair further highlighted that the priority of the federal PSDP is on funding core infrastructure projects approved by ECNEC, followed by CDWP, which constitute over 95% of the total portfolio. As per the sectoral breakup of the Federal PSDP, a major chunk of Rs729.9 billion (65%) resources has been earmarked for infrastructure sector projects. Within infrastructure, priority is given to the Transport and Communications sector with 36%, followed by water resources (12.5%), energy (12%), and PP&H with 4% of allocation. The social sector has a proposed allocation of Rs187.2 billion (16.6%), comprising education/HEC (7%), health (2.2%), SDGs Achievement Programme (6.2%), and other social sectors (1.3%). To bring less developed areas at par with other parts of the country, an amount of Rs54.1 billion (4.8%) for AJ&K, GB, and NMDs of KP has been proposed. The proposed allocation for Science & Technology and IT Sector is Rs45 billion (4%). Funds for the governance sector (7.1%), science & IT (5.9%), and production sector (0.8%) have been earmarked.
Provincial ADPs and SOE Investments
As per the proposed provincial Annual Development Plans submitted by the provinces and recommended by the APCC, the ADP of Punjab will jump from the original allocation of Rs1.240 trillion during the ongoing fiscal year to Rs1.450 trillion during the upcoming fiscal year 2026-27. However, Sindh's ADP will decline to Rs816 billion during upcoming FY 2026-27 from the original Rs887 billion during the ongoing fiscal year. The ADP of Khyber Pakhtunkhwa will increase to Rs564 billion in the upcoming fiscal from Rs455 billion during the ongoing fiscal year, while Balochistan has proposed an ADP of Rs308 billion for the upcoming fiscal year, from the ongoing Rs269 billion. Ministries/divisions have provided details of the projects financed (other than PSDP) by SOEs/subordinate/attached departments/bodies from their own generated resources to gauge the overall impact of development. Under the proposed investment, federal state-owned enterprises will invest Rs451.316 billion from their own resources.
Macroeconomic Targets and Next Steps
The committee also cleared the annual plan and macroeconomic targets for FY2026-27 and recommended a GDP growth target of 4.0 percent, with sectoral growth targets of 3.8 percent for agriculture, 4 percent for industry, and 4.2 percent for services. The committee recommended inflation at 8.2 percent, investment at 15 percent of GDP, and national savings at 14.3 percent of GDP to foster economic stability. The proposed national development outlay and annual plan 2026-27 will be presented to the NEC for further approval.
