Funds suspended as Punjab drafts budget

Contractors warn projects may stall; depts ordered to return unused funds immediately

RAWALPINDI:

The Punjab government has commenced preparations for the 2026–27 fiscal budget, under which the release of funds for all new development schemes has been immediately suspended, along with payments of outstanding dues to contractors.

Orders have also been issued to all departments, autonomous bodies, special municipal corporations and district councils to return any unutilised funds to the provincial treasury.

All payments, except for salaries and pensions, have been halted until June 30. During the outgoing fiscal year, no department of the Punjab government succeeded in meeting its tax targets.

Meanwhile, institutions including health, education and forestry departments have been directed to submit proposals for development schemes for the upcoming financial year within two weeks.

Contractors have strongly criticised the suspension of funds, warning that ongoing development projects will be left incomplete as a result. According to officials, approximately 150,000 permanent posts already abolished will not receive any budgetary allocation in the new fiscal plan. Furthermore, an additional 100,000 permanent posts in grades 1 to 22 are expected to be eliminated by the end of May, and no funds will be earmarked for these positions either.

Under the new budget, the government will continue funding the Annual Development Programme; however, significant cuts are expected in development allocations for departments. Large-scale funding will be reserved primarily for mega projects approved at the provincial level in Lahore.