KP proposes a 10% salary increase, 7% increase in pensions for government employees

In the midst of opposition banks protests, the Khyber-Pakhtunkhwa (KP) government presented on Friday a surplus budget of RS2.119 billion for fiscal year 2025–26 in the Provincial Assembly, describing it as a historical step towards economic recovery after inheriting what it called a province of financial inlays.

The provincial government said that the budget not only reflects good tax management, but also addresses critical development, salary, debt service needs despite the important financial restrictions and unpaid fees of the federal government.

The KP Assembly session, chaired by President Babar Salem, began with the presentation of the Budget by the Minister of Law AFTAB Alam, who also has the finance portfolio.

He affirmed that when Prime Minister Ali Amin Gandapur took over, the financial condition of the province was serious due to what he described as the “poor management of the unconstitutional configuration of the caregiver.”

He added that the treasure had hardly enough funds to cover 15 -day salaries, the main development projects had stagnated, the health card scheme had been discontinued, wheat reserves were insufficient to meet provincial needs, and the province was loaded with growing debts.

The Minister of Finance said that despite these circumstances, the provincial government not only achieved but exceeded its surplus objective, qualifying it as the greatest surplus in the history of the province, and added that the government now has enough reservations to pay salaries for three months.

In addition, he said that the budget exceeds combined surpluses of several previous years.

During the current fiscal year, the Government invested RS150 billion in a provincial development fund, an amount equivalent to about 20 percent of the total debt portfolio of the province. It also reimbursed RS49 billion in pending loans, which included RS18 billion in interest payments.

The total expenditure for next fiscal year has been estimated at RS1,962 billion, against the expected income of RS2.119 billion, creating a projected surplus of RS157 billion.

The budget estimates RS177 billion in foreign assistance through subsidies. The allocation of current expenses, including wages, pensions and operating costs, is RS1,415 billion. Of this, RS1,255 billion has been allocated to the established districts, while RS160 billion will go to the fused tribal districts.

The Annual Development Program (ADP) has been proposed at RS547 billion, including RS155 billion for established districts under the Adp Plus Expanded framework, which reflects an increase of 30 % of the previous allocations. The Government said that these additional 35 billion was used to guarantee the timely completion of priority development schemes.

In terms of fiscal relief, the provincial government proposed a 10 percent increase in salaries and a seven percent increase in pensions for government employees, while announced an increase of 15 to 20 percent in the allocation of disparity for those who do not receive executive assignments.

The minimum wage in the province will rise from RS36,000 to RS40,000 per month. Fiscal relief measures include the reduction of the tax on the timbre tax and the transfer of properties of two percent to one percent, offering exemptions on taxes for properties of up to 4.9 Marlas and reducing the hotel tax of the hotel from 10 % to seven percent.

The professional tax for people who win up to RS36,000 per month has been abolished. In addition, the registration rate and tokens tax in electric vehicles have been renounced.

The Government also proposed to align the salaries of police personnel in KP with those of the Punjab Police. It is proposed that the shuhada package (martyrs) for police officers, from agents to inspectors, increases from RS10 million to RS11 million.

In the education sector, RS4.6 billion for public universities have been published and RS4.9 billion in development funds for higher education have been assigned. In fused districts, the government is reconstructing 46 universities at a cost of 1.55 billion rupees.

A recruitment campaign has been launched to occupy 16,000 teaching positions, while 3.4 million textbooks were distributed and 518,000 scholarships were awarded during the current fiscal year.

Budget documents reveal that the province faces a deficit of RS267 billion under the Prize of the National Finance Commission (NFC). The Federal Government also must RS71 billion in Net Profit of HYDEL and RS58 billion in oil and gas royalties. Foreign assistance subsidies are expected to contribute RS177 billion in the next fiscal year. The provincial income objective has been established at RS129 billion.

Also read: Sindh cm presents the RS3.45tr budget for 2025-26

Previously, the budget session was marked by the interruption of opposition parties. When CM Gandapur entered the assembly room, government members received it with the desk, while opposition legislators sang slogans as “Ali Baba Chalees Chor”.

Some members carried banners with slogans who accused the government of corruption. PML-N MPA Sobia Shahid brought a bugle to the house and flew it during the session. In response, the treasure members stood up and shouted counter-flags. The speaker Babar Salem asked the opposition leader Dr. Ibadullah to intervene, after which opposition banks resumed order.

During the session, the KP Assembly also approved a resolution that expresses solidarity with Iran in the light of the recent Israeli aggression.

In his final comments, the Minister of Finance said that KP had suffered decades of militancy, and strengthening police force remained a priority, said a significant increase in the police budget, aimed at equipping force with modern weapons, protection equipment and surveillance equipment.

He also acknowledged that the restoration of the Sehat card scheme remained in consideration and depended on the fiscal space.