The Khyber-Pakhtunkhwa government on Friday unveiled a Rs. 2,119 billion budget for fiscal year 2025-26, marking a significant increase in development and social sector spending while projecting a budget surplus of Rs. 157 billion.
The budget has no new taxes, with a strong emphasis on health, education, and infrastructure development. Presenting the budget in the provincial assembly, Finance Minister Aftab Alam Afridi said the province expects Rs. 2,119 billion in total receipts against projected expenditures of Rs. 1,962 billion, resulting in a rare surplus for the third consecutive year.
“This is a people-friendly, reform-oriented budget focused on service delivery and inclusive growth,” he said, adding KP’s development strategy aims to uplift marginalized regions and boost human capital.
Development spending
The Annual Development Program (ADP) has been set at Rs. 547 billion, nearly 32% higher than last year’s allocation of Rs. 416 billion. The ADP includes Rs. 195 billion for provincial projects, Rs. 39 billion for district-level schemes, and Rs. 39.6 billion for the merged tribal districts. Foreign-funded development projects will receive Rs. 177 billion.
Over Rs. 53.6 billion, roughly 16% of the total development budget, has been allocated for road infrastructure. Key schemes include the dualization of Bannu–Miranshah road, rehabilitation of link roads in Chashma and Dara Tung, and major water and sanitation projects.
Health and education
The province has allocated Rs. 276.5 billion for the health sector, a 19% increase over last year. Of this, Rs. 27 billion will go towards 182 development schemes, while Rs. 41 billion has been allocated to the flagship Sehat Card Plus program, which now also covers organ and cochlear implants.
Additional health initiatives include Rs. 1.2 billion for Basic Health Units, establishment of neonatal centers, and new cardiac units in Mardan and Bannu.
The education budget has been raised to Rs. 420 billion, an increase of over 11% from the previous fiscal year. Of this, Rs. 13 billion has been allocated for primary and secondary education development, with an additional Rs. 5 billion for enrolling out-of-school children, Rs. 8.5 billion for free textbooks, and Rs. 1.6 billion for teacher salaries.
Higher education received a substantial uplift with Rs. 6.27 billion in development allocations, including Rs. 2.7 billion for converting colleges to applied science institutions, Rs. 3.5 billion for five new colleges, and funding for scholarships. A new girls’ cadet college would be established in Dera Ismail Khan at a cost of Rs. 3 billion.
Other highlights
The KP government has allocated Rs. 13 billion for policing and law enforcement, including Rs. 3 billion for operations in merged districts. It has also proposed a 10% raise in government salaries and a 7% increase in pensions. Contrary to the federal government, which has sustained last year’s minimum wage, the KP government has raised the minimum wage from Rs. 36,000 to Rs. 40,000/month.
Additionally, the province has allocated Rs. 98.3 billion for debt servicing, and introduced a Rs. 150 billion Debt Management Fund. Apart from not introducing any new taxes, the province has also proposed cuts in stamp duties and professional taxes, along with exemptions for electric vehicle registration fees to encourage eco-friendly transportation.