KP Budget: PTI budget - an eye to the future.

That a budget can be 'populist and fiscally expansionary' and yet advance governance and financial reforms is the key takeaway from Khyber Pakhtunkhwa's budget proposals for the next fiscal year.

The Rs1.33 trillion budget prepared with an eye on the next general elections is a distinctive combination of the populist initiatives to meet the electoral needs of the provincial government of the PTI in that province and innovative, reAAformist initiatives to improve governance for advancing its development agenda.

The credit for looking after the political needs of his party in an election year through populist measures without compromising financial discipline must be given to Finance Minister Taimur Khan Jhagra. That is not all. The budget documents give a clear idea of where the minister wants his province and its economy to move.

The improved security conditions, governance reforms and economic infrastructure development in the province over the last few years are already said to have investment from multinationals in an array of sectors with the Kuwait Investment Fund financing the creation of a smart city.

Despite exaggerated revenue numbers, the province has quite intelligently knitted together populism and reforms without compromising on their larger future agenda

The next budget allocates massive development funds of Rs418 billion, continues tax concessions for different sectors given during the virus pandemic, boosts expenditure on health, education and other public services, allows 16 per cent pay and pension hikes for civil servants, and creates thousands of new jobs in the public sector.

With the country entering an election year, the PTI, which has recently been ousted from power in the centre and Punjab and demanding early elections, is still ruling the province. It was expected to propose populist initiatives even if they ran counter to the austere fiscal policies being targeted by the federal government to meet the International Monetary Fund's demands for the revival of its suspended bailout package.

That a province that has already increased its tax and nontax revenue collection by two and a half times to Rs75bn in three years is now looking at the possibility of introducing a contributory pension scheme for its new employees. It will make KP the first federation unit in Pakistan to take this initiative to cut its growing pension expenditure.

The yearly pension expense of KP has grown at an average of 22pc per annum for the...