By Staff Reporter
ISLAMABAD: The federal government pushed back against accusations from Khyber Pakhtunkhwa’s chief minister that it was withholding funds critical for development in the province’s merged tribal districts, asserting in a detailed statement that it has disbursed billions of rupees on schedule and maintains no outstanding liabilities.
The rebuttal, issued on Saturday by the Ministry of Finance, came just a day after Chief Minister Sohail Afridi publicly charged the center with stalling progress under the National Finance Commission’s resource-distribution formula for the current fiscal year. Afridi’s comments highlighted ongoing tensions over fiscal federalism in a country where provinces often spar with Islamabad over revenue shares amid economic strains.
In its response, the ministry reaffirmed the federal government’s “continued commitment to ensuring timely, transparent, and sustained financial transfers” to Khyber Pakhtunkhwa under the NFC Award and beyond. It emphasised that the province receives its allocations fortnightly, with the latest release of Rs46.44 billion occurring on Dec. 17, “underscoring the federal government’s adherence to timely disbursement commitments.”
Under the 7th NFC Award, Khyber Pakhtunkhwa’s share stands at 14.62% of the provincial portion of the divisible pool, the ministry said. “In recognition of the extraordinary burden borne by the province during the war on terror, an additional one per cent of the undivided divisible pool was allocated exclusively to KP,” it added. The framework has persisted beyond its initial five-year term due to a lack of agreement on subsequent awards—the 8th, 9th and 10th—leading to the ongoing application of the 7th NFC’s terms. “Accordingly, KP continues to receive its due share, including the additional allocation for the war on terror,” the ministry stated. “The federal government releases provincial NFC shares on a fortnightly basis, and no outstanding liabilities exist in this regard.”
From July 2010 through November 2025, the center has transferred Rs5.867 trillion to the province as its share of the divisible pool, according to the statement. An additional Rs705 billion has been provided specifically for the war on terror, “reflecting federal recognition of the province’s sacrifices and responsibilities.” Beyond the NFC, the ministry detailed straight transfers totaling Rs482.78 billion over the same period, covering royalties on oil and natural gas, gas development surcharges, excise duties on natural gas and related items.
It also pointed to extra support for the province’s “unique fiscal and administrative challenges,” including financing the expenditures of the newly merged districts formerly known as the Federally Administered Tribal Areas. Since the 2019 merger, the federal government has shouldered these costs from its own NFC share, transferring Rs704 billion to date. Separately, Rs117 billion has been allocated over the years to aid internally displaced persons in the region. “Despite constitutional devolution, the federal government continues to invest in provincial welfare and development,” the ministry asserted.
It cited Rs115 billion allocated to Khyber Pakhtunkhwa over the past 15 years from the federal Public Sector Development Programme for projects typically under provincial jurisdiction. Social safety nets have also been a focus, with Rs481.433 billion spent in the province from fiscal 2016 through 2025 via the Benazir Income Support Programme on unconditional and conditional cash transfers, “providing critical social protection to vulnerable households”.
Looking ahead, the ministry highlighted efforts to bolster the NFC framework through dialogue. At the inaugural meeting of the 11th NFC on Dec. 4, participants agreed to form a sub-group to recommend on integrating the former Fata districts and their share in the divisible pool. “At the request of the government of KP, the first meeting of this sub-group is scheduled for December 23, 2025, with the finance minister, KP serving as the designated convener, demonstrating a collaborative and transparent approach toward resolving outstanding fiscal matters,” it said.
The ministry reiterated the center’s dedication to “equitable resource distribution, fiscal federalism, and sustained support for KP, ensuring that provincial needs, particularly those arising from security challenges, displacement, and administrative integration, are addressed in a timely and responsible manner.”
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