The Ministry of Finance has introduced a phased release mechanism for development funds under the Public Sector Development Programme (PSDP), making disbursements conditional on the government’s available fiscal space during FY2026-27.
According to an official notification, PSDP funds will now be released in four quarterly installments instead of upfront allocations. Under the new mechanism, 15 percent of funds will be released in the first quarter, 20 percent in the second quarter, 25 percent in the third quarter, and the remaining 40 percent in the final quarter of the fiscal year.
The federal government has allocated Rs. 1 trillion for development projects under the PSDP for the new fiscal year.
Background: The decision follows a similar funding restriction strategy adopted in the previous fiscal year aimed at improving fiscal discipline and prioritizing high-impact development projects within limited financial space.
The Planning Division will oversee the release of funds, ensuring that disbursements are made only for approved projects and remain within the sanctioned budget limits. The Finance Ministry has also made prior approval mandatory for all foreign payments related to development schemes.
The notification further states that no payments exceeding approved limits will be allowed without explicit authorization from the Finance Ministry. To enhance transparency and monitoring, a separate assignment account will be opened for each development project.
The new framework is expected to strengthen financial oversight while ensuring controlled and prioritized spending on public development projects.
