Sindh Budget Faces Heat Over Massive Deficit and Karachi’s Omission

Pakistan, June 16 — The Policy Research and Advisory Council (PRAC) has raised strong concerns about the Sindh government’s new budget for 2025-26. The council criticized the budget for increasing the fiscal deficit, cutting support to local governments, and neglecting Karachi’s development needs. This year’s budget shows a deficit of Rs38.5 billion, compared to a balanced budget last year. Experts fear this deficit could lead to more borrowing and financial stress.

According to PRAC, Sindh’s receipts are expected to rise by 17%, but its spending will grow even more-by 18.3%, reaching Rs3.45 trillion. PRAC Chairman Mohammad Younus Dagha appreciated the removal of five taxes, including the Professional Tax and Infrastructure Cess, calling it a positive step for tax simplification. However, he said these tax changes alone are not enough to ensure long-term economic progress.

Dagha further highlighted the decline in funding for local governments. The share of local bodies in the general revenue has dropped from 6.7% last year to only 5.8% this year. Although their total allocation increased slightly from Rs162.5 billion to Rs165 billion, PRAC argued this amount is still insufficient. The council warned this move weakens local governance, service delivery, and decentralisation.

PRAC also criticised the limited focus on Karachi’s urgent issues. Despite the city contributing heavily to the national economy, its mega projects are set to receive only Rs8.3 billion. Karachi continues to suffer from poor roads, water shortages, and lack of public transport. District development funds also remain unchanged at Rs55 billion, offering little relief to ongoing problems.

Lastly, PRAC mentioned concerns over declining education and healthcare outcomes. The council pointed to falling school enrollment and low immunisation rates-just 61% of children in Sindh are vaccinated, compared to 90% in Punjab. PRAC urged the government to rethink its priorities, adopt fairer policies, and bring real reforms for sustainable development and public welfare.