PESHAWAR: The government of Khyber Pakhtunkhwa has presented an annual budget of Rs2.17 trillion for financial year 2026-27 with an estimated deficit of Rs48 billion, comprising current expenditure of Rs1.65 trillion and development expenditure of Rs524.3 billion.
Chief Minister Khyber Pakhtunkhwa Muhammad Sohail Afridi who also holds the portfolio of the finance presented the budget 2026-27 in the provincial assembly here on Friday.
Speaker KP Assembly, Babar Saleem Swati was presiding the proceeding of the house.
Out of total current budget, Rs1.47 trillion allocated to settled districts whereas Rs179.9 billion to Merged Districts. The salaries will cost an amount of Rs53.8 billion and another amount of Rs684.9 billion allocated for non-salary expenses and while the payment of pension to retired government employees cost Rs207.1 billion.
To strengthen fiscal sustainability and reduce reliance on external resources, Provincial Own Source Revenue (OSR) has been budgeted at Rs182.4 billion for FY 2026-27, up from Rs129 billion for FY 2025-26.
The receipt includes the collection of Rs80 billion through Khyber Pakhtunkhwa Revenue Authority (KPRA), other tax receipts of Rs35.9 billion and Non-tax receipts of Rs66.5 billion.
Federal tax assignments are estimated at Rs1.24 trillion, war on terror receipts Rs149.1 billion, straight transfers Rs53.6 billion, windfall levy Rs24.9 billion and receipts from Net Hydel Profits at Rs116.8 billion.
Under the foreign project assistance (FPA), the province will receive an estimated amount of Rs150 billion.
Health, education, and security continue to receive the largest share of the budget, accounting for nearly 50 percent of total spending, reflecting the Government’s priority on human development, service delivery, and peace and security.
Key flagship allocations include Sehat Card Programme, Medical Teaching Institutions, and Social Safety Net programmes, alongside funding for food security, medicines, public sector universities, public transport, police modernisation, support for Temporarily Displaced Persons, and the Good Governance Roadmap.
To strengthen public finances and build resilience against future shocks, the KP Government introducing reforms including the establishment of a Khyber Pakhtunkhwa Takaful Insurance Company, a Disaster Risk Management Fund, a strengthened Debt Management Fund, and improved cash, investment, and fiscal risk management.
The Merged Districts remain a major priority, with a total allocation of Rs272.8 billion, comprising Rs179.9 billion for current expenditure and Rs92.9 billion for development, to support service delivery, infrastructure, social programmes, and economic opportunities.
Copyright Business Recorder, 2026
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