Islamabad: Salary and Pension Increases, Rs. 195 Billion Development Budget, and Federal Dependency Highlight Fiscal Plan
PESHAWAR – The Khyber Pakhtunkhwa (KP) government is set to unveil its Rs. 2,070 billion budget for the fiscal year 2025-26 today, focusing on development initiatives, increased employee benefits, and a heavy reliance on federal transfers.
According to sources, the development budget has been increased by Rs. 44 billion from last year, reaching a total of Rs. 195 billion for the upcoming fiscal year. The provincial government is also likely to announce a 10% increase in salaries for public servants and a 7% raise in pensions for retirees.
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Breakdown of Development Funds and Allocations
Allocations
Annual Development Program (ADP): Rs. 195 billion
ADP for Merged Districts: Rs. 33 billion
Local Government Funding: Rs. 45 billion proposed
Annual Accelerated Implementation Program (AIP): Rs. 50 billion
Foreign Project Assistance: Rs. 175 billion
Public Sector Development Program (PSDP): Rs. 29 billion
Key Revenue Sources for KP Budget 2025-26
NFC Award Transfers: Rs. 1,148 billion
Net Hydel Profit: Rs. 108 billion
Oil & Gas Revenue: Rs. 55 billion
War on Terror Funds: Rs. 138 billion
The KP government is expected to depend on over 90% of its total budget from federal transfers, highlighting ongoing challenges in local revenue generation and fiscal independence.
Public Sector Priorities
The KP budget reflects continued emphasis on infrastructure development, service delivery in merged tribal districts, and strengthening local governance through increased allocations to local governments and the AIP.
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