By: Ijaz Afridi
PESHAWAR: The Khyber Pakhtunkhwa (KP) government is facing challenges as it prepares the budget for the upcoming fiscal year 2025-26. The current expenditure and Annual Development Program (ADP) for the tribal districts have put significant financial pressure on the provincial government.
It is estimated that the KP government will need over Rs 300 billion to cover both current expenditures and development projects in the tribal districts for the upcoming fiscal year. For the current fiscal year, the budget for the tribal districts was set at Rs 259.9 billion, which included Rs 144.6 billion for current expenditures. The current expenditure for the tribal districts in the fiscal year 2023-24 was projected at Rs 116.9 billion, marking an increase of Rs 27.7 billion for the current fiscal year.
According to projections, current expenditures in the upcoming 2025-26 budget are expected to rise to Rs 170 billion. The budget preparation for this fiscal year is already underway, with all provincial departments submitting proposals to the Finance and Planning & Development (P&D) departments for inclusion in the budget.
The provincial budget will be finalised after the federal government presents its budget. Following cabinet approval, the Khyber Pakhtunkhwa government plans to present its budget in the provincial assembly by June 15, after Eid al-Adha.
Sources from the Finance Department indicate that the budget for the tribal districts has created financial difficulties for the KP government. A significant issue is the challenge of securing funds for the former tribal districts, which were merged into Khyber Pakhtunkhwa following the 25th Constitutional Amendment. However, the National Finance Commission Award was not updated to reflect this change. Additionally, the KP government has had to cover expenses for 90,000 employees in various sectors in the tribal areas since 2018.
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For the fiscal year 2024-25, the estimated current expenditure for the tribal districts, which includes salaries and utility bills, was Rs 144 billion. The KP government has released over Rs 100 billion so far, while the federal government has provided only Rs 60 billion in grants and aid up to the last quarter. Consequently, the KP government has had to reduce funding for development projects, resulting in delays for many initiatives in the tribal districts.
According to P&D sources, due to the lack of funds in the upcoming budget, starting new mega projects in the tribal districts is unlikely. In the current fiscal year’s development budget, Rs 121 billion was allocated for the tribal districts, but only Rs 39.82 billion has been released by the KP government, with only Rs 30.92 billion spent so far. Most projects in the tribal districts are currently on hold due to the unavailability of funds. Overall, the Khyber Pakhtunkhwa government will need more than Rs 300 billion for ongoing expenses and the ADP for the next fiscal year, primarily relying on revenue distribution from the federal government.
