K-P sounds alarm on 'withheld' NFC funds

In letter to PM, CM Afridi flags Rs54.4b, says merged districts hit hardest

PESHAWAR:

Khyber-Pakhtunkhwa (K-P) Chief Minister Sohail Afridi has said that persistent delays in federal transfers are pushing the province toward a severe financial crisis, particularly affecting development in the newly merged districts - the former Federally Administered Tribal Areas (ex-Fata).

The chief minister has written a letter to Prime Minister Shehbaz Sharif expressing grave concern over the federal government's continued failure to release constitutionally mandated federal transfers, according to a handout issued by the Chief Minister's Secretariat in Peshawar.

"Against Khyber Pakhtunkhwa's NFC [National Finance Commission] entitlement of Rs658.4 billion from the Federal Divisible Pool, the province has received only Rs604 billion to date, leaving a shortfall of Rs54.4 billion," he wrote, according to the handout.

"This is not an accounting variance but a material breach that has directly impaired cash management, disrupted budget execution and constrained service delivery across critical sectors of governance. The impact has been most severe in the merged districts," he added.

The chief minister wrote that the provincial budget for 2025–26 was framed and approved strictly on the basis of clear constitutional fiscal entitlements, including net hydel profit, oil and gas royalties, post-Fata-merger NFC shares and regular monthly transfers under the NFC Award.

In the merged districts, he said, development, stabilisation and state consolidation are recognised as national priorities, but despite the provincial allocation of Rs292 billion, the federal releases amount only to Rs56 billion, so far.

"This severe and continuing gap has undermined essential public services and development interventions in historically marginalised areas, eroding the objectives of the merger and weakening national cohesion," he warned.

Afridi said actual releases have consistently fallen short of budgeted levels, adding that the withholding of routine monthly NFC transfers finds no sanction in the Constitution and undermines the core principles of cooperative federalism.

He underscored that K-P remains on the frontline of counter-terrorism operations, while simultaneously shouldering extraordinary and unavoidable expenditures arising from flood response and rehabilitation, as well as the management and support of temporarily displaced persons (TDPs).

"These are national responsibilities; however, the financial burden continues to be borne disproportionately and unsustainably by the province," he said. "Any further delay would only compound the province's fiscal stress and weaken governance capacity at a critical juncture."

The chief minister urged the federal government to take immediate corrective action, including the full and unconditional release of all outstanding federal dues, particularly routine monthly NFC transfers, net hydel profit, oil and gas royalties, and allocations for the merged districts.