Pakistan to further ‘slash’ development budget to fund petrol subsidy

The Pakistan government has decided to create additional fiscal space for a petrol subsidy by further reducing the federal development budget, ARY News reported on Wednesday, citing sources.

As per details shared with ARY News by sources familiar with the development an additional Rs63 billion cut has been approved, bringing the total reduction in the federal development budget to Rs163 billion.

As a result, the development budget for the მიმდინარე fiscal year has been reduced to Rs837 billion, down from the originally allocated Rs1,000 billion. The federal government had already slashed Rs100 billion from the development budget last month.

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The cuts were primarily made to accommodate subsidies on petrol, officials confirmed.

Sources further stated that the largest reductions have been made in development funds allocated to provinces and special regions, with cuts reaching up to 20 percent so far. Additionally, budgets for water resources and the National Highway Authority have been reduced by more than 17 percent.

The reallocation reflects the government’s efforts to manage fiscal pressures while providing relief through fuel subsidies.

Last week, Prime Minister of Pakistan, Shehbaz Sharif decided to reduce the petrol price and diesel rate in the country.

Addressing the nation, PM announced that the petrol price was reduced by Rs11.83 per litre, bringing the new rate to Rs366.58 per litre.

Meanwhile, the diesel price was cut by Rs134.81 per litre, with the new rate set at Rs385.54 per litre.