Financial crisis: K-P cuts development allocation by 25%

Adopts other austerity measures to stay afloat

PESHAWAR: In a bid to conserve funds, the Khyber-Pakhtunkhwa government has reduced development funds of all future projects by 25%, according to an official notification.

As part of measures to save money in the fiscal year 2017-18, the provincial government has also hinted at impeding the release of funds for projects that are already underway or releasing the bare minimum for their completion.

“These additional measures will stay in place till the government has a better footing and the financial state improves,” read the notification of Sept 12, a copy of which is in possession of The Express Tribune.

It further specified that till further notice, there will be no new appointments, upgrading or restructuring of posts while no extra allowances or grants will be given to the existing employees.

The procurement of plants, machineries, vehicles and other excess requirements for development projects have also been banned. The only maintenance work that will be allowed under the ad hoc rules are repairs to government buildings, only if any future flooding damages them.



All sorts of non-developmental schemes have come to a standstill, while fuel allocations for all government officials – bureaucrats and elected representatives – have also been reduced by 25% . The use of unauthorised or unissued vehicles has been banned as well.

This fiscal year, the K-P government had a total budget of Rs208 billion set aside for development projects, out of which Rs82 billion was foreign aid and Rs126 billion was provincial allotment. The budget cut will be applicable to the provincial component of the budget, reducing it to Rs94.5 billion.

These budget cuts will also affect district governments as they are entitled to 30% of the funds from the Annual Development Program (ADP) under the Local Government Act, 2013. The government has allocated Rs28 billion for local governments that makes up 22% of the ADP but after the 25% budget cut, this amount will come down to Rs21 billion. It is important to note that the Pakistan Tehreek-e-Insaf government has cut local government funding for the last three fiscal years.

In the year 2015-16, the government slashed the district ADP by 50% due to insufficient financial resources and they were only given Rs15 billion against the Rs42 billion allocated to them according to the provincial budget.

While speaking to The Express Tribune, K-P government spokesperson Shah Farman explained that the measures had been taken so that funds could be allocated to projects at grass root levels, such as upgrading medical equipment at district hospitals.

“These measures have been taken in the general interest of the people. The funds have been diverted to strengthen institutions at the district level rather than just focusing on cities,” said Farman.