By: Muhammad Ajaz Afridi
The Khyber Pakhtunkhwa (KP) government has decided to increase the Debt Management Fund to Rs 150 billion in the budget of the next fiscal year 2025-26 to repay debts and bring financial stability. The aim of increasing the Debt Management Fund is to manage the province’s growing debts and achieve financial stability. According to sources, the Debt Management Fund is also likely to make the budget of the next fiscal year surplus, which will also fulfil the condition of giving a surplus budget to Khyber Pakhtunkhwa by the IMF, it is said. The Khyber Pakhtunkhwa government had established the Debt Management Fund in September 2024, in which Rs 30 billion was initially kept, which was approved by the regular cabinet. This step was taken under the Khyber Pakhtunkhwa Public Financial Management Act 2022, it is said. The debt management fund has increased from Rs 30 billion to Rs 50 billion in the current fiscal year, while it has been decided to increase this fund to Rs 150 billion by the next fiscal year 2025-26. According to the available evidence, in 2013, the total debt of Khyber Pakhtunkhwa was Rs 4.8 billion, which increased over time. In 2019, this debt increased to Rs 236 billion, which increased further by June 2023, and the volume of debt on the province reached Rs 531 billion, while by June 2024 it increased to Rs 680 billion. Thus, in May 2025, the total debt of Khyber Pakhtunkhwa has reached Rs 725 billion. During the fiscal year 2023-24, the Khyber Pakhtunkhwa government paid a total of Rs 38.73 billion in loans, of which Rs 24.79 billion was the principal amount, while Rs 13.95 billion was paid as interest. During the current fiscal year, the provincial government had allocated a total of Rs 67 billion for repayment of loans, including Rs 40 billion in loans and Rs 27 billion in interest payments. The International Monetary Fund (IMF) has set a surplus target of Rs 178 billion for the Khyber Pakhtunkhwa government in the current fiscal year budget. In the recent review meeting, the IMF has also increased the tax and non-tax revenue targets for the Khyber Pakhtunkhwa government. Thus, Khyber Pakhtunkhwa is committed to providing a surplus of Rs 178 billion during the current fiscal year 2024-25, while the IMF has also imposed an additional burden of Rs 41 billion on the Khyber Pakhtunkhwa government in terms of tax and non-tax revenue. In this regard, the Finance Division has informed the Khyber Pakhtunkhwa government. It is reported that The increase in Debt Management Funds is likely to meet the IMF surplus condition for the next fiscal year 2025-26, and at the same time, the chances of cuts in the development budget from the Debt Management Fund will also be reduced, which will enable funds to be released for all development projects in the next fiscal year without any difficulty. According to the Finance Department, the amount of the Debt Management Fund has reached Rs 50 billion during the current fiscal year, and it is proposed to increase this fund by Rs 100 billion in the next fiscal year. Thus, the amount of Debt Management Funds will increase to Rs 150 billion during the next fiscal year. Advisor to the Chief Minister on Finance, Muzammil Aslam, has confirmed the increase in the Pakhtun Digital Code Debt Management Fund and said that it is proposed to take this fund to Rs 150 billion for the next fiscal year 2025-26. However, the cabinet’s decision regarding the provision of funds will be final, and its formal approval will be taken. will be taken from the cabinet.
