BUDGET 2026-27: Record Rs3.6tr overspending belies govt’s austerity claims

ISLAMABAD: Despite the government’s claims of austerity and tight fiscal discipline, Finance Minister Muhammad Aurangzeb has actually asked the parliament to give post-facto approval for a record Rs3.684 trillion supplementary grants for expenditure overruns and re-appropriation.

Budget documents suggest that parliament would be required to approve more than four times higher supplementary grants later this month when compared to Rs895bn it regularised last year. This put a question mark on the processes leading to budget estimates and expenditures. Documents placed before parliament by the finance ministry indicate that debt servicing, subsidies, power sector, water division, defence services, health related expenditures, civil armed forces and related agencies stand out in exceeding budgetary allocations. The ministry said the amounts that it was seeking approval as a fait accompli pertained to May 17 to June 30 of 2024-25 and from July 1 to May 15 for 2025-26 after the conclusion of budgetary processes for respective years and over-ran allocations approved by the parliament and yet remain legally unapproved as required under articles 80-84 of the Constitution.

The ministry in its written statement said these expenditures were those which could neither be met from the allocated budgetary resources nor be legitimately postponed during these financial years. These include both supplementary and technical supplementary grants.

The technical supplementary grant means surrender of funds from one expenditure head and its authorisation for use in another account or organisation but generally without any major fiscal burden. The regular supplementary grants are confirmation of expenditure overrun or spending without a legal sanction and has a direct additional bearing on the public kitty.

Finance minister asks parliament to clear supplementary grants that dwarf last year’s Rs895bn

According to summary of supplementary grants and appropriations, over Rs3.2tr has come up for regularisation for 2024-25 and about Rs485bn for the current fiscal year. As such the major regular supplementary grants for FY25 include Rs2.6tr unsanctioned expenses on acco­unt of debt servicing, followed by Rs430bn for power sector, Rs38bn for grants and subsidies, Rs23bn by Defence Division and Rs22bn for capital outlay on civil works.

Likewise, the major supplementary grants for FY26 worth Rs485bn is led by Rs127.5bn for grants and subsidies, Rs112bn for the power sector, Rs57bn in federal education and professional training, Rs34bn for Defence Division, Rs30bn for national health services and regulations, Rs20bn for the interior ministry and Rs22.4bn for poverty alleviation and social safety. A major additional grant of Rs14bn was given to the information ministry, Rs10bn allocated for the FBR, Rs7.9bn for capital outlay on civil works and Rs6.6bn for railways’ capital expenditure.

Normally, the regular supplementary grants are meant to provide for expenditure for purposes not foreseen at the time of finalisation of demands for grants. Such supplementary gra­nts put extra burden on the budget. Many of them are described as charged expenditure out of the federal consolidated fund which is presented to parliament just for information and taken as app­roved without voting. Simply put, parliament cannot reject it because the amount has already been consumed.

In the current fiscal, a Rs4bn supplementary grant was released for payment of cash compensation to residents of Chauntra village for handing over land for Defence Complex Islamabad in addition to Rs34bn for purchase of spare parts of helicopters, fencing of Pak-Iran border, internal security duties, special north and south security divisions, development of naval bases etc. The major power sector’s supplementary grant in FY26 including Rs105.5bn for equity injection in distribution companies and Rs6.5bn for power sector’s development needs. In the education sector, the major chunk (Rs54bn out of total Rs57bn) went to Daanish Education Trust, bailout packages for Quaid-i-Azam University and Cadet College Hassan Abdal and Pakistan Education Endo­wment Fund.

A supplementary grant of Rs127.4bn was utilised for PM’s Austerity Fund during FY26. Strangely, about Rs11bn supplementary grant was given to PTV against tariff adjustment and net-metering and Rs2.8bn for English news channel. A Rs800m supplementary grant was also approved for Pakistan Virtual Assets Authority and Rs2bn for Pakistan Digital Authority and Assan Khidmat Centre.

A Rs15bn special additional grant was also approved for maintenance of law and order and Rs4.7bn for support package to missing persons. A Rs30bn supplementary grant pertained to purchase of vaccines and associated material on behalf of provincial governments and Rs1.4bn for Frontier Corps for security of Reko Diq Project in Balochistan. Another Rs22bn supplementary grant was sanctioned for PM’s Ramazan Package and Rs7bn for MNA’s development schemes in four provinces and Islamabad.

Published in Dawn, June 16th, 2026