In a controversial decision, Pakistan cut the development outlay for Pakistan-Occupied Kashmir (PoK), including Gilgit-Baltistan, by 16% and allocated more funds to Chinese-funded infrastructure schemes. Islamabad took this step as part of its Rs 4.083 trillion ($14.4 billion) national development plan.
Referring to IMF restrictions, Pakistan rationalised that it had reduced the emphasis on PoK while increasing allocations for schemes under the China-Pakistan Economic Corridor (CPEC).
PoK Development Suffers Major Cut
The Pakistani federal government reduced the PoK development budget from Rs 75 billion to Rs 63 billion ($222 million). This 16% cut has threatened the region’s already weak infrastructure. Pakistani newspaper Dawn reported that the region would be “handicapped by lower allocations.” The action impacts major areas such as water, power, and highways.
Planning and Development Minister Ahsan Iqbal confirmed that PoK would suffer setbacks. He added IMF constraints had compelled the government to focus on high-yielding projects with scarce resources.
Chinese Projects Receive Budget Boost
Though Pakistan reduced PoK allocations, it enhanced provisions for significant Chinese projects. These are the Diamer-Bhasha Dam and the Hyderabad–Sukkur Motorway. Both the projects are being carried out by Chinese firms or in joint ventures.
In May 2020, Pakistan entered into a Rs 442 billion deal with a Chinese joint venture of China Power and the Pakistani Army’s engineering branch, the Frontier Works Organisation (FWO), for the Diamer-Bhasha Dam. This project has the new funds now.
CPEC Drives Highway Expansion
Islamabad also spent Rs 1 trillion to upgrade the N-25 Highway in Balochistan. The road links Chaman with Karachi through Quetta. Planning Minister Ahsan Iqbal confirmed PM Shehbaz Sharif had asked particularly that Rs 120 billion ($426.7 million) be allocated on the Chaman-Quetta-Karachi Expressway.
Although earlier asserted to be supported by oil savings, this highway upgrade is now officially included under the CPEC umbrella.
Pakistan Faces Budget Dilemma
The 2025–26 federal budget will be presented by Finance Minister Muhammad Aurangzeb on June 10 after Eid al-Adha. Pakistan faces mounting pressure from the IMF, forcing trade-offs between local development and strategic infrastructure ambitions.
By slashing PoK funding while expanding CPEC commitments, Islamabad has once again prioritised geopolitical goals over regional equity.
