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• CM unveils Rs2.17tr budget, says only PTI founder can authorise payments to federal govt
• Claims funds for former tribal areas not released in full
• No new taxes; salaries and pensions raised by 7pc
• Property tax exemption for properties up to 5 marlas
PESHAWAR: Khyber Pakhtunkhwa Chief Minister Muhammad Sohail Afridi on Friday said the provincial government will not give any grant to the federal government, as he presented a Rs2.17 trillion budget for fiscal year 2026-27, carrying a projected deficit of Rs48bn.
Addressing the KP Assembly’s budget session, chaired by Speaker Babar Saleem Swati, the chief minister said any decision on providing additional funds to the federal government would be made by PTI founder Imran Khan.
“We had made it clear during the National Economic Council (NEC) meeting that the decision regarding provision of additional funds to the federal government will be made by PTI founder Imran Khan — the last authority to approve it,” the chief minister told the house.
He said that during the NEC meeting, he had pointed out that while all other political parties had been allowed meetings with their party heads, the KP government continued to be refused meetings with its leader. He said Mr Khan was being kept in isolation and solitary confinement, with all meetings —including with his wife, Bushra Bibi, and other family members — banned.
The PTI leadership, he said, had demanded restoration of Mr Khan’s meetings with his family and lawyers, access to party leadership, and a weekly telephone call with his sons. “We will not sign any draft until we meet Mr Khan,” the chief minister warned.
On the National Finance Commission (NFC) award, Mr Afridi said the prime minister had hinted at completing the process within the next six months. However, he said that if the NFC award was not announced within that period, the share of the merged areas would be included in KP’s share under the 7th NFC Award.
He added that no progress had been made so far on the 11th NFC, which was aggravating the grievances of the merged areas.
On the deficit, the chief minister said the province would bridge the Rs48bn shortfall through its own savings and would not resort to borrowing for the purpose.
Receipts
The budget projects the province’s total revenues at Rs2.12 trillion, against a total expenditure of Rs2.17 trillion for the next fiscal year.
Federal transfers account for Rs1.5 trillion of the total revenue, including Rs1.24 trillion in federal tax assignment transfers. The province will also receive Rs149bn in lieu of 1 per cent of the divisible pool on the war on terror, Rs53.5bn in straight transfers, Rs24.597bn from the windfall levy on oil, Rs38.2bn in net hydel profit (NHP) for the next fiscal year, and Rs78.4bn in NHP arrears.
The province’s own tax and non-tax receipts have been projected at Rs182.4bn, an increase of approximately 41.3 per cent over the current year’s target of Rs129bn. Of this, own tax receipts are pitched at Rs115.9bn and non-tax revenue at Rs66.4bn.
Grants for the merged areas from the Centre have been projected at Rs199bn, comprising Rs95bn in current budget grants, Rs29bn for the Annual Development Programme (ADP), Rs52.2bn for the Accelerated Implementation Programme (AIP), Rs17bn for temporarily displaced persons, and Rs5.8bn for the district ADP.
Mr Afridi said the federal government had walked back on its promise of allocating Rs100bn under the AIP, instead earmarking a paltry Rs27bn. Foreign project assistance has been projected at Rs150bn, while federal development and non-development grants from the Public Sector Development Programme (PSDP) have been pitched at Rs5.1bn.
Expenditure
Of the total Rs2.17 trillion outlay, Rs1.64 trillion has been allocated for current expenditure and Rs524.2bn for the Annual Development Programme.
Current expenditure for settled areas has been pitched at Rs1.46 trillion, including Rs334.3bn for provincial salaries, Rs305bn for tehsil salaries, Rs201.4bn for pensions, Rs457bn for non-salary expenditure, Rs43.4bn for non-salary expenses of tehsils, Rs45.3bn for capital expenditure, Rs22bn for miscellaneous expenses, and Rs57bn for the provincial debt management fund.
Current expenditure for merged areas has been projected at Rs180bn, including Rs65.4bn for provincial salaries, Rs49bn for tehsil salaries, Rs5.5bn for pensions, Rs29.9bn for provincial non-salary expenses, Rs13bn for non-salary expenses of tehsils, and Rs17bn for temporarily displaced persons. For the Annual Development Programme, Rs524bn has been allocated, including a provincial component of Rs235bn, Rs47bn for district ADP, Rs29bn for merged areas ADP, Rs52.2bn for the AIP, Rs150bn for donor-funded projects, and Rs5.1bn under the federal PSDP.
Relief measures
The government announced a 7pc increase in pay and pensions and proposed merging the adhoc relief allowances of 2022 and 2025 into basic salary. Conveyance allowance has been increased by 50 per cent, while the special conveyance allowance has been raised from Rs6,000 to Rs10,000. The minimum wage has been increased to Rs45,000 from Rs40,000.
No new taxes have been imposed in the budget. The infrastructure development cess has been revised downward to 0.75 per cent from the existing 2 per cent, a move expected to reduce the cess burden by 62 per cent and aimed at lowering the cost of doing business and promoting investment in the province.
Commercial and residential properties up to five marlas have been granted property tax exemption, benefiting about 200,000 households. The government also announced it would maintain its tax relief policy for the merged areas and Malakand division, with no new taxes imposed on these areas in the coming fiscal year.
Published in Dawn, June 20th, 2026
