Khyber Pakhtunkhwa Budget 2025-26: Proposal for 10% Increase in Salaries of Government Employees

Peshawar: Khyber Pakhtunkhwa’s Finance Minister, Aftab Alam, presented the provincial budget for the fiscal year 2025-26, proposing a 10% increase in the salaries of government employees and a 7% hike in pensions. The budget also includes a proposal to raise the minimum monthly wage by 4,000, bringing it to 40,000 rupees. Additionally, a proposal has been made to increase the disparity allowance for employees who do not receive the executive allowance by 15-20%.
Minister Aftab Alam, while delivering the budget speech, highlighted that the province recorded a 74% increase in non-tax revenue. He emphasized the government’s commitment to improving the health sector, viewing it as a vital part of its development strategy. Under the Sehat Card Plus program, 4.4 million people have already benefited, with the initiative continuing for the entire population of the province.
Regarding education, the provincial government remains committed to progress, having allocated 4.9 billion rupees for higher education and established several new degree colleges.
The total size of the budget has been estimated at 2.119 trillion rupees, with annual expenditures pegged at 1.962 trillion rupees. The budget anticipates a surplus of 157 billion rupees. The proposed annual development program stands at 547 billion rupees. However, the province faces a shortfall of 267 billion rupees under the IMF Fiscal Compact (IMFC). Furthermore, the federal government owes the province 71 billion rupees in electricity profit arrears and 58 billion rupees in oil and gas payments. The province is expected to receive 177 billion rupees in foreign aid and grants.
For salaries and other expenditures, 1.415 trillion rupees have been allocated, with 1.255 trillion rupees earmarked for administrative expenses in settled districts and 160 billion rupees for the tribal areas.
Revenue collection for the upcoming year is estimated at 129 billion rupees. Additionally, several tax-related proposals have been made, including reducing the stamp duty on residential and commercial property allotment and transfer from 2% to 1%, granting a tax exemption on properties of 4.9 marla size, lowering hotel bed tax from 10% to 7%, and eliminating professional tax for individuals earning less than 36,000 rupees per month. The registration and token tax for electric vehicles will also be waived under the proposed budget.
The 2025-26 budget reflects the provincial government’s efforts to boost economic growth, improve public services, and support its workforce.