Shortage of Local Funds Cuts Foreign-Funded Projects by Half

The government has recently reduced funding for foreign-funded development projects by more than half, cutting the allocation from Rs. 537 billion to Rs. 255 billion for the current fiscal year. This decision was made due to a shortage of local currency funds, with 98 projects totaling an estimated cost of Rs. 8.1 trillion initially included in the Public Sector Development Programme (PSDP) for fiscal year 2026-27.

The committee stressed the need for effective monitoring and timely implementation, particularly for projects nearing completion, while also emphasizing the importance of balancing foreign assistance with the country's fiscal capacity and making better use of local resources to reduce unnecessary dependence on external loans.

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