Education remains a crucial driver of human development and economic growth in Pakistan. Investments in learning strengthen human capital, enhance productivity, and expand opportunities for innovation and inclusive progress. Article 25-A of the Constitution guarantees free and compulsory education for all children aged five to sixteen, while Article 37(b) commits the state to removing illiteracy and providing free and compulsory secondary education within the minimum possible period. Together with Pakistan’s commitment to Sustainable Development Goal 4 (SDG 4) on inclusive and equitable quality education, these constitutional obligations highlight the centrality of education in national policy.
Yet, despite this strong policy foundation, the country continues to face critical challenges in education access and outcomes. With 25.37 million out-of-school children¹ and 77% of ten-year-olds unable to read and understand a simple text², the urgency of aligning financing priorities with teacher quality, learning materials, and stronger assessment systems has never been greater. Recent NAT and ASER findings further highlight persistent gaps in foundational literacy and numeracy. These challenges have been compounded by external shocks, including the 2022 floods, which destroyed thousands of schools and disrupted learning for millions of children. In May 2024, the Federal Government declared an Education Emergency to accelerate reforms and mobilise resources to address this crisis.
Since the 18th Constitutional Amendment, education has been a devolved function, placing planning, financing, and service delivery primarily under provincial responsibility. This reform intended to ensure that authority and decision-making were devolved further down to local governments, which was a positive step in principle. However, this has yet to be fully realised in execution. This decentralised framework allows provinces to tailor spending to local needs but has also made fiscal coordination and comparability more complex. Resource distribution between the federation and provinces continues under the Seventh National Finance Commission (NFC) Award, announced in 2009 and still in effect.
At the provincial level, Balochistan does not have a notified Provincial Finance Commission (PFC) award, while other provinces have not introduced new PFC awards in recent years, resulting in ad hoc arrangements for intra-provincial transfers. This continued reliance on ad hoc arrangements limits predictability and transparency in resource allocation. Together with annual Public Financial Management (PFM) processes, these mechanisms shape the overall structure of education financing across the country.
This report analyses education financing from 2019–20 to 2023–24 using official data primarily from the Financial Accounting and Budgeting System (FABS), Annual Budget Statements (ABS), and Annual Development Programmes (ADPs). It assesses trends in adequacy, efficiency, and equity at the federal and provincial levels, combining quantitative analysis with qualitative insights from a peer advisory group of education and public-finance experts.
Link to full document: Public Financing in Education 2025-26.
