ISLAMABAD: The Ministry of Finance rejected claims that the federal government has withheld funds from Khyber Pakhtunkhwa (KP), stating that provincial shares under the National Finance Commission (NFC) Award are released.
Furthermore, the clarification came a day after KP Chief Minister Sohail Afridi alleged that development work in the newly merged tribal districts was being affected due to delays in the disbursement of NFC funds for the current fiscal year. The ministry confirmed the federal government’s commitment to timely, transparent, and sustained financial transfers to KP under the NFC Award and other mechanisms.
It said that under the 7th NFC Award, KP’s share was fixed at 14.62 per cent of the provincial share in the divisible pool.
In addition, the province was allocated an extra one per cent from the undivided divisible pool in recognition of the burden it bore during the war on terror. Moreover, the ministry noted that although the 7th NFC Award was initially designed for five years, the lack of consensus on subsequent awards had resulted in its continued implementation.
It added that KP continued to receive its full entitlement, including the additional allocation related to security operations. Meanwhile, the ministry said that Rs46.44 billion was released to the KP government on December 17, demonstrating adherence to the established schedule.
From July 2010 to November 2025, a total of Rs5.867 trillion had been transferred to KP as its share of the divisible pool, including Rs705 billion provided specifically for war-on-terror-related expenditures.
The statement further said that uninterrupted straight transfers had also been ensured. Between July 2010 and November 2025, Rs482.78 billion was transferred to the province through royalties on oil and gas, gas development surcharge, excise duty on natural gas, and other related heads.
However, the Centre said it had provided additional financial support to address KP’s unique fiscal and administrative challenges.
After the merger of the former Federally Administered Tribal Areas (Fata), the federal government has financed expenditures of the merged districts from its own NFC share, transferring Rs704 billion since 2019.
The ministry also mentioned federal development and welfare spending in the province. It said Rs115 billion had been allocated to KP from the federal Public Sector Development Programme over the past 15 years, and Rs481.433 billion was spent through the Benazir Income Support Programme between FY2016 and FY2025.
