The Ministry of Finance (MoF) has issued a mandatory directive to all federal ministries, departments, and autonomous bodies to surrender any unspent budget allocations within a 10-day window. This move is intended to streamline the finalization of revised estimates for the current fiscal year (FY2025-26) and solidify the budget framework for FY2026-27.
Principal Accounting Officers (PAOs) are required to identify and return "anticipated savings" across four primary expenditure categories: civil government operations (both salary and non-salary), grants, subsidies, and Public Sector Development Programme (PSDP) funds. All surrender orders must be formally communicated to the MoF Budget Section by May 10 for entry into the national accounting system.
Shift in Fiscal Timelines
While the Public Finance Management (PFM) Act of 2019 typically sets May 31 as the deadline for surrendering savings, the Finance Division has moved this date forward by nearly a month. This acceleration follows instructions from Parliament’s Public Accounts Committee (PAC) aimed at improving fiscal discipline and ensuring that stagnant funds are redirected to areas of urgent need.
Development Spending and Redistribution
The fiscal landscape for the current year has been significantly impacted by external geopolitical pressures:
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PSDP Reductions: The development budget has already seen a cut of PKR 173 billion approximately 20% of its total allocation. These funds were diverted to a Prime Minister’s fuel subsidy fund created to counter rising petroleum costs resulting from the US-Israel conflict with Iran.
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Utilization Rates: Public welfare spending remains low, with federal entities utilizing only 41.5% (PKR 415 billion) of the PKR 1 trillion PSDP budget during the first nine months of the fiscal year. Under the government's official release mechanism, approximately 60% of funds should have been released by this stage.
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Parliamentary Schemes: In contrast to general welfare projects, schemes for ruling parliamentarians under the Sustainable Development Goals Achievement Programme (SAP)—showed rapid execution. Nearly 90% of the PKR 63.24 billion revised allocation for these schemes was authorized, with 70% already spent within a four-month period.
As of March 31, 2026, total reported expenditure across all ministries stood at PKR 414.96 billion against a total annual allocation of PKR 1 trillion. The PAC has reiterated that ministries requesting additional funds will be held strictly accountable for their prior spending efficiency.
