The Khyber Pakhtunkhwa (KP) government is set to present a Rs 2,070 billion budget for the fiscal year 2025-26, marking a significant increase from last year’s Rs 1,654 billion allocation. According to sources cited in Daily Jang, the budget includes Rs 1,352 billion for ongoing expenses, with Rs 680 billion earmarked for salaries and Rs 200 billion for pensions. The provincial government is expected to approve a 10% raise in salaries and a 7% increase in pensions, aiming to alleviate financial pressures on public sector employees.
Key allocations in the budget include Rs 520 billion for non-salary expenses and Rs 433 billion for development projects—a 40% rise compared to the previous year. The KP government anticipates receiving Rs 1,148 billion from the National Finance Commission (NFC) award, along with Rs 108 billion from net hydel profits and Rs 55 billion from oil and gas revenues. Additionally, the province expects Rs 138 billion in compensation for its role in the War on Terror at a 1% rate.
Chief Minister Ali Amin Gandapur has unveiled plans for 500 new development schemes, with an initial allocation of Rs 195 billion that could potentially rise to Rs 250 billion if required. A newly formed committee will oversee project approvals, prioritizing construction, health, and education sectors.
Despite these ambitious plans, KP faces financial constraints, relying on federal transfers for 93% of its budget. Provincial tax revenue has grown by 40% this year, but local revenue contributes only 6% to the total budget. To address this, the government is considering tax reductions, including income tax cuts for salaried individuals and property tax relief. New welfare initiatives, such as solarization projects, emergency health and education funds, and a 10% increase in tobacco cess, are also proposed.
In a move to support struggling industries, an amnesty scheme may be introduced to settle pre-2020 dues for older industrial units. However, Gandapur criticized political opponents, accusing them of misusing state resources and vowing to defend constitutional rights amid ongoing tensions.
The budget reflects KP’s focus on development and public welfare but underscores the province’s ongoing reliance on federal support to meet its financial needs. With significant allocations for salaries, pensions, and infrastructure, the government aims to balance economic growth with social welfare, though challenges remain in achieving fiscal self-sufficiency.
