The prolonged closure and suspension of trade at the Pak-Afghan border since October has triggered a sharp collapse in Khyber Pakhtunkhwa’s trade-linked revenues, dealing a major blow to the province’s finances.
Official data shows that revenue from infrastructure development cess (IDC) declined by 53.02 percent during the first seven months of the current fiscal year, falling to Rs3.48 billion from Rs7.42bn collected in the corresponding period of last year. The drop has been attributed directly to the continued disruption of cross-border trade.
The financial strain has prompted the Khyber Pakhtunkhwa government to seek urgent intervention from the federal government. Chief Minister’s (CM) Adviser on Finance Muzammil Aslam has written a four-page letter to Commerce Minister Jam Kamal, requesting an immediate meeting of provincial and federal stakeholders to address the revenue fallout and broader trade challenges.
According to officials, the revenue shortfall has emerged as a significant setback for provincial finances, with IDC collections showing a consistent monthly decline since October. Receipts fell sharply from Rs1.3bn to under Rs487 million in October, followed by a further drop to just Rs198m in November, compared to Rs1.29bn in the same month of the previous fiscal year.
The provincial government has constituted a revenue review committee to assess the situation, which found an alarming decline in cess collection following the suspension of border trade. Officials say the collection of IDC is directly linked to the movement of goods and commercial activity, making revenue targets virtually unattainable as long as trade remains stalled.
Aslam informed the federal commerce ministry that the initial disruption in cess collection had stemmed from a court stay order, which was resolved in November. However, recovery efforts launched after the legal hurdle was removed failed to yield results, as cross-border trade continued to remain suspended.
The disruption has also had spillover effects on traders and exporters, with consignments and payments reportedly stranded across the border. The resulting liquidity pressure has left many businesses unable to meet their statutory cess obligations, further compounding the revenue decline.
The KP government has warned that the prolonged suspension of trade is creating serious revenue, economic, and employment consequences for the province, underscoring the need for coordinated federal and provincial action to prevent further fiscal deterioration.