The IMF is squeezing Pakistan’s development wallet. Only Rs1.13 trillion allocated to PSDP against a Rs4.1 trillion requirement — that’s a 72 percent shortfall in what the country actually needs to build infrastructure, schools, hospitals, everything. The government unveiled a record Rs4.715 trillion development plan on paper, but don’t let that number fool you.
What’s happening here? The Fund’s conditions force tight fiscal discipline, so bureaucrats had to pick winners and losers. PML-N’s signature project — national highways — got protected. Coalition partners got their share too: Rs87 billion carved out for their priorities. But schools, hospitals, water systems? They’re fighting over scraps.
The Circular Debt Problem Shifts Shape
The planning minister called this shortfall a “new circular debt crisis.” That’s not hyperbole. When you can’t fund development projects, contractors don’t get paid. They then don’t pay suppliers. Those suppliers can’t pay workers. The unpaid bills pile up and become tomorrow’s debt burden. So the government’s trying to manage this by focusing resources on projects already underway rather than starting fresh ones.
What This Means for Pakistan
Infrastructure stays half-finished. Provinces wait longer for water and electricity projects. Youth unemployment ticks up when construction jobs don’t materialize. Meanwhile, we’re locked into IMF conditions that won’t ease until inflation falls and fiscal accounts balance — and nobody’s holding their breath on either front. The real question isn’t whether we can survive this year; it’s whether we can catch up on years of deferred spending before the next crisis hits. Read more on TheCapital.pk.
