The government of Khyber Pakhtunkhwa is most likely to slash its budget for the next fiscal by Rs50 billion. Blaming the ongoing financial crunch, this will perhaps deal a severe blow to the already struggling economy of the province.

The Budget Strategy Paper -1 made by the finance department for the year 2016-17, shows the total size of the budget is likely to be 10 percent less than this year’s. The document also notes that the fiscal space for development activities in the province is expected to remain under stress - but with hope that development partners of the provincial government will ‘continue maintaining their commitments to local socio-economic development’. Overall, the total outlay of the next budget at Rs437.65 billion, is Rs50 billion less than the ongoing year’s.

The provincial government had left some heads scratching when it announced its budget back in June 2015. It contained very optimistic revenue estimates from activities like the sale of felled trees and sales from housing colonies being erected under government guidance. It also assumed, very confidently, regarding retrievals of debts from the centre. Against this very self-assured revenue assumption, the provincial government had also made some of the most lavish promises to the forthcoming local governments.

Then perhaps, it is safe to say that the cuts appear to be due to the overestimation of revenues in the last budget. Reportedly, the government had been warned that many of its revenue estimates were overly optimistic, and the funds allotted for the Annual Development Plan would not materialise. But many, if not all objections were overruled by the Chief Minister. 50 percent is a huge amount, and it is quite hocking that estimates were off by so much.