CM defends budget as 'responsible' amid fiscal strain

Says budget includes no new development schemes, major shift toward completing ongoing projects

KARACHI:

Sindh Chief Minister Murad Ali Shah on Thursday termed the Rs3.652 trillion budget for fiscal year 2026-27 unveiled a day earlier, a "responsible financial document" prepared amid reduced federal transfers, rising expenditures and widening economic uncertainty.

Addressing a post-budget press conference at the Sindh Assembly Auditorium, CM Shah said the province's overall fiscal deficit is projected at around Rs300 billion, driven by shortfalls in federal transfers and weaker-than-expected provincial tax collection.

He said Sindh received Rs1.644 trillion in federal transfers by May 2026, which is Rs441 billion below projections, adding that even with an expected additional Rs200 billion by year-end, a significant gap of around Rs250 billion would persist. Provincial tax revenues, he added, are also likely to fall short by Rs52 billion against a Rs676 billion target.

Despite fiscal constraints, CM Shah said the province had maintained its development momentum, with Rs930 billion released under last year's record Rs1.018 trillion Public Sector Development Programme (PSDP).

For the upcoming year, the provincial government has set total receipts at Rs3.525 trillion, including Rs3.038 trillion in own-source revenue, Rs2.263 trillion from federal divisible pool transfers and Rs456 billion in provincial revenues.

The chief minister said Sindh had, for the first time, exercised its constitutional authority to contribute funds for national defence needs, allocating Rs260 billion as a federal grant. He said all provinces had agreed to support the federation despite financial pressures. He paid tribute to the framers of the Constitution, particularly Zulfikar Ali Bhutto, for incorporating the relevant provisions.

Total current expenditure for FY27 has been estimated at Rs2.560 trillion. Excluding the defence-related transfer, administrative spending stands at Rs2.3 trillion.

CM Shah said Rs1.264 trillion had been earmarked for salaries and related expenditures, adding that previously announced ad-hoc relief allowances had been merged into basic pay structures. The minimum monthly wage has been raised to Rs43,000.

Local governments will receive Rs155 billion, while public universities have been allocated Rs48 billion. Grants for hospitals, universities and autonomous bodies stand at Rs686 billion, and Rs54.2 billion has been set aside for debt servicing.

Acknowledging fiscal tightening, the chief minister said non-development expenditure had been reduced from Rs61.87 billion to Rs36 billion under austerity measures. The Annual Development Programme (ADP) has been slashed from Rs1.018 trillion to Rs720 billion, with no new schemes introduced. Instead, the government will focus on completing 2,056 ongoing projects.

The chief minister said Sindh would continue to pursue large-scale infrastructure development through public-private partnerships (PPP), a model he said had received international recognition.

He announced plans for a deep-sea port at Keti Bandar in Thatta under a PPP framework, saying consultations with Chinese partners and other investors were already underway. The federal government has also been invited to participate in the project. Calling it a "game changer" for Sindh's maritime economy, he said the project had been discussed at the highest political level.

The chief minister also announced work on the Sindh International Financial Centre in Karachi, for which three potential sites have been identified. The project, he said, would be completed within the current government's tenure.

CM Shah said the province would establish a green energy-powered data centre, leveraging Sindh's solar potential. He noted that surplus electricity from renewable sources could be supplied to international technology firms and data centre operators.