• ADP allocation pitched at over Rs235bn; own-source revenue target set at Rs182bn
• Govt workers to get 7pc raise
• No new taxes to be introduced
• Official says federal grant approval subject to Imran’s assent

PESHAWAR: The Khyber Pakhtunkhwa government will unveil its over Rs2.15 trillion tax-free budget for fiscal year 2026-27 on Friday.

Sources told Dawn that the provincial government has allocated over Rs235 billion for the Annual Development Programme (ADP) in the budget, while its own-source revenue has been pitched at Rs182bn.

“We have based our budgetary estimates on the Federal Board of Revenue tax target of Rs15.2tr,” an official told Dawn. He said the provincial government had also decided to give a seven per cent pay raise to government employees, along with an increase in conveyance allowance.

Besides, he said no new taxes would be introduced in the budget and the government had decided to reduce the infrastructure development cess to 0.75pc from the existing 2pc.

The official said tax on five-marla houses would also be reduced, benefiting over 200,000 households. He said the budget would also include loans for students as well as Pakistanis going overseas. He said it would be a pro-growth budget.

However, the official added, the approval of the federal grant would be subject to the assent of incarcerated Pakistan Tehreek-i-Insaf founder Imran Khan.

The finance department, in its budget strategy paper released in May, had pitched the budget outlay at Rs2.3tr for the next fiscal year, with federal tax assignment estimated at Rs1.6tr.

In addition, the province’s own-source revenue was pitched at Rs150bn, merged areas funds at Rs321bn and foreign project assistance at Rs160bn.

The budget strategy paper had pitched the settled areas’ current budget at Rs1.5tr and ADP at Rs426bn. Besides, current expenditure for merged areas was estimated at Rs181bn, while their ADP was pitched at Rs153bn.

The paper stated that in the current fiscal year, development spending faced challenges in meeting targets, with actual expenditure reaching only Rs169bn against a budget estimate of Rs547bn, reflecting a 30pc achievement rate.

“This has resulted in a downward revision of the total expected development outlay to Rs444bn, though this still represents a 31pc increase over the previous year’s actual spending. Overall, the grand total of expenditures as of March stands at Rs988bn, 50pc of the budget, leading to a rationalised annual growth projection of 19pc as the government balances fiscal restraint with protected obligations,” it said.

Meanwhile, a notification issued by the assembly secretariat stated that in pursuance of sub-rule (1) of Rule 33 of the Khyber Pakhtunkhwa Government Rules of Business, 1985, the annual budget for financial year 2026-27 would be presented before the Khyber Pakhtunkhwa Assembly on June 19 (today) at 2pm.

Published in Dawn, June 19th, 2026