The federal government has decided to redirect Rs100bn from its development budget to a newly created austerity fund, aiming to protect consumers from rising global oil prices linked to instability in the Gulf region.
The step was taken after a meeting of the Economic Coordination Committee (ECC), chaired by Finance Minister Senator Muhammad Aurangzeb. It reflects a clear shift in priorities, with immediate relief on energy prices taking precedence over long-term development spending.
Under the plan, the funds will be transferred through a Technical Supplementary Grant into the Prime Minister’s Austerity Fund 2026. The amount will be used to manage price differences on petroleum products, helping limit the impact of international market fluctuations on local consumers.
To make room for this adjustment, the Planning, Development and Special Initiatives Division carried out a review of ongoing projects. Various ministries were asked to give up part of their Public Sector Development Programme allocations. Officials said the aim was to avoid disrupting projects that are performing well, though some slowdown in development activity is expected.
The move is designed to keep fuel prices in check without placing immediate pressure on the federal budget. However, it also means fewer funds will be available for infrastructure and other public sector initiatives.
Wheat procurement policy adjusted
In a separate decision, the ECC approved the purchase of up to 1 million metric tons of wheat to maintain federal reserves under the Interim National Wheat Policy 2025-26.
Unlike previous years, the procurement will be carried out through a competitive process involving the private sector. This marks a shift away from the traditional government-led buying system.
Officials said the approach takes into account improving crop conditions but also ongoing weather risks. The aim is to maintain sufficient reserves while avoiding early intervention that could affect market prices for farmers.
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