Pakistan water sector overspent PSDP allocation by 35 percent in FY26

Infrastructure spending surged past the Rs101 billion target, highlighting execution momentum but raising questions about fiscal discipline in development budgets.

By Handelsavisen Newsroom · Automated 2026-07-28 02:42 UTC · 1 min read

The water sector in Pakistan consumed 135 percent of its allocated funds for the Public Sector Development Programme (PSDP) during fiscal year 2025–26, according to reports from The Nation.

The sector was assigned Rs101 billion for the period but ultimately utilised Rs136.35 billion, marking a significant deviation from the revised budgetary targets.

This overspend occurred against a backdrop of broader fiscal expansion, as overall development spending across ministries, divisions, and corporations also exceeded its revised targets.

The data suggests that execution bottlenecks may have cleared in the final months of the fiscal year, leading to a surge in disbursements that outpaced initial planning assumptions.

For investors and analysts tracking Pakistan’s sovereign risk profile, such deviations in capital expenditure execution are critical.

While high utilisation rates can indicate improved project delivery and reduced idle cash, they also signal potential weaknesses in budgetary forecasting and fiscal control.