Pakistan, June 3 -- The Public Sector Development Programme (PSDP) for 2025-26 has been set at Rs880 billion, reportedly the lowest in four years. This reduction comes at a time when Pakistan requires stronger investment in long-term growth, social infrastructure, and climate resilience.

Over 55 percent of federal spending now goes toward interest payments on domestic and external debt, which has crossed Rs75 trillion. As a result, fiscal space has narrowed sharply.

The Federal Board of Revenue (FBR) has missed its collection target by nearly Rs1.008 trillion in the first 11 months of FY25. With the national tax-to-GDP ratio still hovering under 10 percent-among the lowest globally-Pakistan faces a widening fiscal imbalance.

To its cre...