Federal govt rebuts KP CM's claims, says NFC transfers are up to date

Pakistan’s Ministry of Finance has said the federal government remains committed to timely and transparent financial transfers to Khyber Pakhtunkhwa province under the National Finance Commission Award, citing continued support for development, fiscal stability and post-conflict rehabilitation.

In a statement, the ministry said Khyber Pakhtunkhwa receives 14.62% of the provincial share in the divisible pool under the 7th NFC Award, along with an additional 1% of the undivided divisible pool to compensate for the burden borne by the province during the war on terror. The 7th award, initially designed for five years, remains in effect because successive awards were not finalized, the ministry said.

The federal government releases NFC shares every two weeks and has no outstanding liabilities, according to the statement. Most recently, it transferred PKR 46.44 billion to the Khyber Pakhtunkhwa government on Dec. 17.

From July 2010 through November this year, the federal government transferred about PKR 5.87 trillion rupees to the province from the divisible pool. During the same period, it provided an additional PKR 705 billion for war-on-terror-related expenditures, the ministry said.

Beyond NFC transfers, the federal government has continued straight transfers to the province, including royalties on oil and natural gas, gas development surcharge and excise duty on natural gas. These transfers totaled PKR 482.78 billion from July 2010 to November 2025.

The ministry's statement follows Khyber Pakhtunkhwa Chief Minister Sohail Afridi's claims that the federal government has not released the amount allocated for this fiscal year under the NFC Award, which was affecting development in the tribal districts.

In its statement, the ministry said it has also provided financial support outside the NFC framework to address the province’s unique fiscal challenges. Since 2019, the federal government has transferred PKR 704 billion to cover expenditures in the newly merged districts following the integration of the former Federally Administered Tribal Areas. An additional PKR 117.17 rupees has been provided over the years to support internally displaced persons.

Despite constitutional devolution, the federal government continues to fund development and social protection programs in the province, the statement said. About PKR 115 billion has been allocated to Khyber Pakhtunkhwa from the federal Public Sector Development Program over the past 15 years, while PKR 481.43 billion has been spent in the province through the Benazir Income Support Program from FY16 to FY25.

On future fiscal arrangements, the ministry said the 11th NFC was constituted Aug. 22 this year, and held its first meeting Dec. 4. A subcommittee was formed to make recommendations on the fiscal treatment of the newly merged districts and their share in the divisible pool.

At the request of the Khyber Pakhtunkhwa government, the subcommittee’s first meeting is scheduled for Dec. 23, with the provincial finance minister serving as convener, the ministry said.