Khyber Pakhtunkhwa Faces Major Budget Hit As Federal Transfers Shrink

(MENAFN- Tribal News Network) Due to a decline in federal tax revenues, there is a risk that Khyber Pakhtunkhwa may receive 220 billion rupees less in the current fiscal year, which could affect the province's development projects, cause delays in new schemes, and increase financial pressure.

According to Finance Department Khyber Pakhtunkhwa documents, the province was initially estimated to receive 1,507 billion rupees from the federal government in the fiscal year 2025–26. However, during the first nine months until March 2026, only 851 billion rupees have been received.

After a slowdown in federal revenues and a decline in tax collection, the federal government has revised the estimate for Khyber Pakhtunkhwa down to 1,287 billion rupees. This means the province is likely to receive 220 billion rupees less than the original estimate.

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The documents further state that due to Iran–US tensions and global economic pressure, Pakistan's economy is also being affected, which has created difficulties for the federal government in achieving its financial targets.

Experts say that Khyber Pakhtunkhwa heavily depends on federal funds for its current expenditures, government salaries, and development projects. Therefore, a reduction in federal revenues may put additional pressure on the province's financial system.

According to sources, the possible shortfall of 220 billion rupees is also creating difficulties for the provincial government in maintaining a surplus budget, while delays are being observed in the release of funds for development projects.

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