KP seeks Centre’s help amid loss of revenue due to border closure

2026-01-30 - 02:46

ISLAMABAD: The continued closure and suspension of trade at the Pak-Afghan border since October has led to a 53.02 per cent decline in revenues of the Khyber Pakhtunkhwa government, prompting the province to seek urgent intervention from the federal government. The border closure triggered sharp revenue losses for KP as the collection of infrastructure development cess (IDC) fell to Rs3.48 billion, from Rs7.42bn, during the first seven months of the current fiscal year over the corresponding period of last year. Muzammil Aslam, the KP chief minister’s finance adviser, has written a four-page letter to Commerce Minister Jam Kamal, seeking an urgent meeting of provincial and federal stakeholders. The meeting is expected to deliberate on the revenue implications for KP and the challenges faced by exporters and traders, including stuck payments and the loss of business activity. Collection of cess has dropped to Rs3.48bn in 7MFY26 from Rs7.42bn The provincial government has already constituted a revenue review committee to examine the situation and found an alarming decline in IDC since suspension of the border trade. Pakistan’s exports to Afghanistan remain heavily concentrated at Torkham and Ghulam Khan, while trade through Kharlachi and Angoor Adda, in Khyber Pakhtunkhwa, continues to decline, indicating a post-Taliban shift in cross-border trade patterns. Torkham’s growth reflects its role as the gateway to Afghanistan’s key consumption centres, with Khyber Pakhtunkhwa border stations accounting for nearly 80 per cent of total exports in FY25. Prolonged disruption Mr Muzammil informed the federal commerce ministry that the prolonged border disruption was creating serious revenue, economic, and employment consequences for the province. He said revenue shortfall has emerged as a major blow to provincial finances. He said the initial disruption in cess collection had originated from a court stay order, which was resolved in November. Recovery efforts were launched immediately after the legal hurdle was removed. But those efforts failed to produce results as cross-border trade remained suspended, effectively bringing commercial activity to a standstill. The adviser further pointed out that exporters and traders now face consignments and payments stranded across the border, intensifying liquidity pressures across the trading community. The financial stress has left many businesses unable to meet their statutory cess obligations because of the sudden and prolonged trade suspension. Muzammil Aslam further pointed out that the decline in IDC collection is visible each month, with particularly steep drops recorded since October, when receipts fell from Rs1.3bn to under Rs487 million. In November, collections dropped to just Rs198m from Rs1.29bn during the same month in FY25. The collection of cess is directly linked to the movement of goods across borders and commercial activity. With trade suspended, achieving collection targets has become virtually impossible. Traders’ grievances Mr Muzammil also spoke about problems faced by traders. “They have genuine difficulty in making payments because they are unable to receive funds from buyers due to the overall stagnation of cross-border business. “This situation is beyond the control of both traders and tax collectors and may result in a broader slowdown in economic activity across the province if trade disruptions continue.” Published in Dawn, January 30th, 2026