The governments of Punjab and Khyber Pakhtunkhwa have finalized key proposals for their respective provincial budgets for the fiscal year 2025-26, including a 10% salary increase for government employees and major allocations for development projects.

Punjab has prepared the draft for its upcoming fiscal budget with a total development allocation of Rs. 1,200 billion. According to sources, no new taxes are proposed; instead, the government aims to expand the tax net by including non-tax paying sectors.

The Annual Development Programme (ADP) will fund 2,750 development schemes, including 1,353 new projects worth Rs457 billion. Additional key allocations include:

• Rs207 billion for 32 ongoing development programmes
• Rs100 billion for the CM’s Local Roads Programme
• Rs4.34 billion for the Punjab Saaf Pani Authority
• Rs9 billion for school meal programs in 8 districts
• Rs10 billion for the CM Tractor Programme
• Rs89 billion for the Easy Business Finance Initiative

Sector-wise, Punjab plans to allocate Rs110 billion for education, Rs90 billion for healthcare, and expects a 600% increase in the tourism budget. Under the Punjab Model Village Program, the provincial government will develop 800 villages, while the World Bank will support development in an additional 1,600 villages.

Khyber Pakhtunkhwa’s proposed budget for FY 2025-26 is estimated at Rs2,070 billion, with Rs. 195 billion earmarked for the Annual Development Programme, reflecting a Rs. 44 billion increase from the previous year.

The government is also expected to implement:

• 10% salary hike for government employees
• 7% increase in pensions

Other major allocations include:

• Rs45 billion for Local Government
• Rs33 billion for merged districts (formerly FATA)
• Rs50 billion for the Accelerated Implementation Programme (AIP)
• Rs75 billion in Foreign Project Assistance
• Rs29 billion under the Public Sector Development Programme (PSDP)

According to KP Finance Adviser Muzzammil Aslam, development efforts in merged districts have begun using existing resources. However, if the NFC Award is finalized, the province could receive Rs. 150–200 billion in additional funding.

As per the budget figures, KP expects Rs1,148 billion under the NFC Award, Rs108 billion from Net Hydel Profit, Rs55 billion from oil and gas revenues, and Rs138 billion under the War on Terror compensation, highlighting the province’s heavy reliance on federal transfers, which constitute over 90% of its total budget.