The Ministry of Finance has linked the release of development funds for FY2026-27 to the availability of fiscal space, introducing a phased funding mechanism for projects under the Public Sector Development Programme (PSDP).

According to a notification issued by the ministry, the Rs. 1 trillion PSDP allocation for the current fiscal year will be released in four quarterly installments instead of being made available upfront.

Under the schedule, 15 percent of the allocated funds will be released during the first quarter, followed by 20 percent in the second quarter, 25 percent in the third quarter and the remaining 40 percent in the final quarter of the fiscal year.

The notification states that the Planning Division will release funds only for approved development projects, with disbursements required to remain within the sanctioned budget allocations.

The Finance Ministry has also made its prior approval mandatory for all foreign payments related to PSDP projects. No payments exceeding the approved limits will be processed without the ministry’s authorization.

To strengthen financial oversight and improve monitoring of public spending, the government has directed that a separate assignment account be opened for each development project.