Pakistan’s annual Economic Survey indicates that the freeze on development funds for provinces, initially imposed to manage fiscal constraints, will extend beyond the next fiscal year. This continuation stems from persistent revenue shortfalls and the federal government’s commitment to meeting International Monetary Fund (IMF) conditions. The survey highlights a significant decline in provincial development spending, impacting crucial infrastructure and social sector projects. These funds were initially halted in the previous fiscal year, and the report suggests no immediate resumption is planned. The federal government is prioritizing debt servicing and essential expenditures, leaving limited resources for provincial development. The report also notes that this financial squeeze is exacerbating existing economic challenges within the provinces, potentially hindering growth and service delivery. The overall economic outlook remains cautious, with continued reliance on external financing.