KP Govt Presents Rs2.1 Trillion Surplus Budget for FY 2025-26 with No New Taxes

The Khyber Pakhtunkhwa (KP) government has presented a surplus budget of Rs2.119 trillion for the fiscal year 2025-26, with no new taxes introduced.

The budget includes a 10% increase in salaries and a 7% increase in pensions for government employees.

Total estimated expenditures are Rs 1,962 billion, leaving a surplus of Rs 157 billion.

Khyber Pakhtunkhwa (KP) Finance Minister Aftab Alam presented the provincial budget, proposing a 15% to 20% increase in disparity allowance for government employees who are not receiving executive allowance.

He revealed that under the National Finance Commission (NFC) award, KP faces a deficit of Rs. 267 billion. The federal government owes KP Rs. 71 billion in net hydel profit and Rs. 58 billion under oil and gas revenues.

Key Budget Highlights:

• Estimated provincial revenue: Rs. 129 billion.

• Stamp duty on residential/commercial property allotment and transfers to be reduced from 2% to 1%.

• Professional tax on individuals earning Rs. 36,000/month to be abolished.

• Tax exemption on residential/commercial properties up to 4.9 marla.

• Hotel bed tax to be reduced from 10% to 7%.

• Registration fee and token tax on electric vehicles to be waived.

Expenditures and Grants:

• Total annual expenditure estimated at Rs. 1,962 billion.

• A surplus budget of Rs. 157 billion was presented.

• Foreign aid and grants expected: Rs. 177 billion.

• Rs. 1,415 billion allocated for salaries and other expenses.

Police Pay & Martyrs Package:

• Proposal to equalise police salaries (from constable to inspector) with those of the Punjab Police.

• Shuhada (martyrs) package increased:

  • Constable, ASI, Inspector: from Rs. 10 million to Rs. 11 million.

  • DSP and ASP: from Rs. 15 million to Rs. 16 million.

  • SP, SSP, DIG: from Rs. 20 million to Rs. 21 million.

• Bereaved families to receive 5, 7, 10 marla and 1-kanal plots.

Budget Context & Challenges:

Finance Minister Alam said when PTI assumed power after the February 8 elections, KP was facing a severe financial crisis, budget deficit, and economic instability. However, under CM Ali Amin Gandapur’s leadership, PTI worked diligently to overcome these challenges.

Adopting financial discipline, the province restored public welfare projects and put KP back on the development path. The minister said this success is due to the people’s trust and collective resolve.

Financial Recovery & Reforms:

• KP’s treasury initially had funds to cover only 15 days’ salaries.

• Health cards were suspended; wheat reserves were insufficient.

• Development spending was at historic lows.

• Yet, the government achieved and even exceeded its surplus budget target.

• KP now has funds to cover 3 months’ worth of salaries.

A Debt Management Fund was established to ensure the timely repayment of loans. In FY 2024–25, Rs. 150 billion was invested in the fund—20% of KP’s total debt. KP repaid Rs. 49 billion in liabilities, including Rs. 18 billion in markup.

A new policy mandates that all departments must consult the finance department before acquiring loans, ensuring that borrowing supports repayment capacity and income generation.

Security & Police Modernization:

KP has long been a victim of terrorism, and peace is key to development. Hence, the police budget was increased for modern equipment and tools to maintain law and order.

Health & Social Welfare:

Despite criticism from the opposition, the Sehat Card was restored and now covers treatments for critical illnesses like kidney, liver, and bone marrow transplants.

For good governance, Rs. 7 billion were allocated for reform initiatives across multiple departments.

Local Governance & Tourism:

• Rs. 550 million allocated for local governments.

• Another Rs. 550 million set aside for the tourism department.

Development Budget:

• Rs. 120 billion set for settled districts’ development.

• First time in history: increased by 30% to Rs. 155 billion under ADP Plus, with Rs. 35 billion for project completion.

Revenue Generation:

• Khyber Pakhtunkhwa Revenue Authority (KPRA) collected Rs. 41.635 billion in 10 months—19% more than last year.

• Non-tax revenue grew by 74%.

Health Sector:

• In 2024-25, 4.4 million people benefited from Sehat Card Plus.

• Life insurance coverage will be introduced next year.

Education Sector:

• Rs. 4.6 billion released to universities in FY 2024-25.

• Rs. 4.9 billion allocated for higher education development.

• In merged districts, 46 colleges rebuilt under a Rs. 1.552 billion project.

• Recruitment of 16,000 staff initiated.

• 34 million books distributed in public schools.

• 518,000 scholarships awarded.

This budget reflects the KP government’s attempt to restore stability, prioritise welfare, and navigate financial constraints with targeted reforms and disciplined governance.