Pakistan

KP Budget 2024-25: KP Upsets Government by Planning Budget Before National Budget

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With a total of Rs 1.7 trillion to spend, the budget has Rs 100 billion extra. It suggests spending Rs416 billion on development projects.

Salaries and pensions will go up by 10 percent, and the lowest wage will be Rs36,000 a month.

In an unusual move that made the government in Islamabad angry, the PTI-led Khyber Pakhtunkhwa (KP) government revealed its first budget for the upcoming fiscal year (FY25). The budget is set at Rs1.7 trillion, with Rs416 billion dedicated to development, mainly focusing on social protection, law and order, and economic development.

It’s very uncommon for a provincial government to present its budget before the federal government does. The federal government’s budget is expected to be announced on June 7 this year.

The budget was presented by KP Finance Minister Aftab Alam Afridi in a session of the provincial assembly chaired by Speaker Babar Saleem Swati. The budget predicts a surplus of Rs 100 billion. The planned spending of Rs1.65 trillion is 21 percent more than the Rs1.3 trillion spent in the current fiscal year (FY24).

Mr. Afridi mentioned that Rs28 billion is set aside for the government’s main Sehat Card Plus program. Also, Rs29 billion is allocated for wheat subsidy, and Rs12 billion for three youth employment schemes.

He stated that Ehsaas Rozgar, Ehsaas Youth, and Ehsaas Hunar programs will create 100,000 job opportunities for young people.

Regarding housing, Rs3 billion is dedicated to the Ehsaas Apna Ghar initiative, aiming to build 5,000 houses.

A significant allocation of Rs10 billion is made for the long-delayed Chashma Right Bank Canal lift-cum-gravity project in Dera Ismail Khan district. Afridi highlighted that this project would address the province’s food security concerns.

Furthermore, Rs3 billion is set aside for subsidizing the Peshawar Bus Rapid Transit (BRT) project.

The Minister of State for Finance, Ali Pervez Malik, strongly criticized the PTI-led KP government for revealing its provincial budget before the federal budget for FY25. He called it ‘irresponsible’.

During a press conference in Islamabad, Mr. Malik blamed the PTI for almost bankrupting the country. “The KP government should’ve waited for the federal budget,” he said, accusing Imran Khan’s party of wanting to harm Pakistan’s economy.

He mentioned that the KP budget was made based on guesses and wished that the KP government would change its approach. He also hoped that Chief Minister Gandapur would work together with the federal government and the finance minister.

The KP finance minister declared a 10% raise in salary and pension for government workers and retirees. They also increased the minimum wage from Rs32,000 to Rs 36,000 per month.

The budget estimates expect the province to receive Rs1.7 trillion, with over Rs1.2 trillion from the federal government. The province’s share of federal tax is estimated at Rs 902.5 billion. Additionally, they’ll receive Rs 108.4 billion for war on terror efforts, Rs42.9 billion as straight transfers, Rs46.3 billion from the windfall levy on oil, Rs 33.1 billion from net hydel profit (NHP), and Rs78.21 billion in NHP arrears.

The province’s own revenue is estimated at Rs 93.5 billion, including Rs63.1 billion from taxes and Rs30.2 billion from non-tax sources. They’re also asking for Rs31.3 billion from the federal government as a ways and means advance.

Furthermore, Rs259.9 billion is allocated for the merged districts, including Rs72.6 billion for the current budget, Rs55.3 billion for additional current budget needs, Rs36 billion for the annual development program (ADP), Rs40 billion for the Accelerated Implementation Programme (AIP), Rs 39.2 billion without funding, Rs17 billion for the 3% share for merged areas, and money for the rehabilitation of temporarily displaced persons.

For the merged districts, provincial employee salaries are estimated at Rs52.1 billion, tehsil salaries at Rs 42.6 billion, and pensions at Rs4.4 billion. Non-salary expenses are projected to be Rs418.5 billion, with Rs 17 billion allocated for temporarily displaced persons and Rs9.8 billion for tehsil non-salary expenses.

For development spending in the next fiscal year, Rs416.3 billion is set aside. This includes Rs120 billion for the provincial Annual Development Program (ADP), Rs24 billion for districts, Rs36 billion for merged districts, Rs 79.2 billion for the Accelerated Implementation Programme, Rs130.5 billion for foreign-assisted projects, and Rs416 billion for federal Public Sector Development Programme (PSDP) projects.

Finance Minister Afridi announced that the government plans to lower sales tax on services in various areas. Sales tax on hotels will be reduced from 8% to 6%, but hotels will now need to use a restaurant invoice management system. Additionally, there will be a fixed tax on wedding halls.

Furthermore, the budget suggests decreasing the property tax per kanal to Rs10,000 from Rs13,600. The commercial tax rate on rentals will be lowered from 16% to 10% of the rent, and the tax on private hospitals, medical stores, and other health-related businesses will decrease from 16% to 5%.

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