KP Assembly approves bill to tighten provincial fiscal discipline

PESHAWAR: The Khyber Pakhtunkhwa (KP) Assembly has approved the Fiscal Responsibility and Debt Limitation (Amendment) Bill, 2026, ARY News reported.

According to points in the bill, fiscal discipline in the province will be further tightened. The government will be allowed to run a fiscal deficit only in exceptional circumstances.

The annual debt servicing limit will be set at 5 percent of average revenue. If debt servicing exceeds 5 percent, government approval will be mandatory. Even with government approval, debt servicing cannot exceed 7 percent.

The bill sets the overall limit for government debt and guarantees at 75 percent of average revenue. Government debt and guarantees cannot exceed 100 percent under any circumstances.

Autonomous and semi-autonomous institutions will not be allowed to obtain loans without government permission.

Under the amendment, the Debt Management Unit will be renamed the Debt Management Office. A permanent Debt Management Office will be established in the Finance Department.

The Director General and staff of the Debt Management Office will be appointed through a competitive process on three-year contracts.