ISLAMABAD: The federal government on Friday announced a Rs3.675 trillion development outlay for FY2026-27, with the second phase of the China-Pakistan Economic Corridor (CPEC-II) standing out as the only significant new project in an otherwise continuity-focused development programme.
The overall development budget comprises a Rs1 trillion Public Sector Development Programme (PSDP), Rs2.224 trillion in Provincial Annual Development Programmes (ADPs), and Rs451 billion in development spending by state-owned enterprises (SOEs).
Presenting the federal budget, Finance Minister Muhammad Aurangzeb stated that more than 60 percent of federal development priorities are concentrated in key sectors, including transport, energy, information technology, science and technology, agriculture, health, and education.
A symbolic allocation of Rs1 billion has been earmarked for CPEC Phase-II, marking the launch of the next stage of Pakistan-China economic cooperation.
Transport Infrastructure Gets Major Share
The government has allocated over Rs365 billion for transport infrastructure development. Key projects include:
- Rs100 billion for the N-25 Highway connecting Karachi with Balochistan.
- Rs30 billion for the long-awaited M-6 Sukkur–Hyderabad Motorway.
- Fresh financing support from the Asian Development Bank (ADB) for the Main Line-1 (ML-1) railway project from Karachi to Rohri.
- Rs2 billion for the Thar Coal Connectivity Project.
- Rs93 billion for transport projects across all provinces.
Energy Sector Receives Rs116.2 Billion
The power sector has been allocated Rs116.2 billion, with major investments directed toward strategic hydropower projects including:
- Dasu Hydropower Project
- Tarbela Dam Extension
- Diamer-Bhasha Dam
Additionally:
- Rs50 billion has been allocated for nine solar and wind energy projects.
- Rs8 billion for other renewable energy initiatives.
- Rs13.1 billion for expansion and strengthening of the national transmission grid.
Water, Housing and Climate Resilience
The government has earmarked Rs103.1 billion for 43 water-sector projects, including:
- Rs22 billion for Karachi’s K-IV Water Supply Project.
- Rs10 billion for broader water infrastructure development.
Aurangzeb said the development programme is expected to support the creation of eight million jobs, while Rs54.6 billion has been allocated for sustainable urban development and housing. The allocation includes plans to construct 150,000 climate-resilient housing units.
Education, Technology and Innovation
The higher education sector will receive Rs46 billion, including:
- Rs34.9 billion for the Pakistan Education and Research Network (PERN) and initiatives promoting digital learning and artificial intelligence.
- Rs3.6 billion for science and technology programmes, supporting universities and SMEs in manufacturing, agriculture, electronics, and emerging technologies.
Special Allocations for AJK, GB and Merged Districts
A total of Rs144.9 billion has been allocated for Azad Jammu and Kashmir (AJK), Gilgit-Baltistan (GB), and the merged districts of Khyber Pakhtunkhwa, including:
- Rs45 billion for AJK.
- Rs44 billion for Gilgit-Baltistan.
- Rs56 billion for the merged districts.
In addition, the Prime Minister has announced special grants of Rs5 billion for AJK and Rs4 billion for Gilgit-Baltistan.
Despite the sizeable development envelope, the FY2026-27 budget largely focuses on completing ongoing projects, with CPEC Phase-II remaining the only notable new development initiative introduced in the federal PSDP.
Story by Syed Irfan Raza
