The federal government on Saturday rejected claims by the Khyber Pakhtunkhwa (KP) government that National Finance Commission (NFC) funds have been stalled, stating that provincial shares are released fortnightly and that no outstanding liabilities exist.
In a statement, the Ministry of Finance said it had released Rs 46.44 billion to KP under the NFC Award earlier this month, reiterating that Public Sector Development Programme (PSDP) funds cannot be classified as NFC arrears.
The clarification follows recent accusations by the KP chief minister that the province is owed Rs 2,200 billion by the federal government.
Rs 8.4 Trillion Transferred to KP Since 2010
According to official data shared by the Ministry of Finance, the federal government has transferred Rs 8,404 billion (Rs 8.4 trillion) to the Khyber Pakhtunkhwa government between 2010 and November 2025.
“These transfers were made through multiple constitutionally mandated and program-based channels,” the ministry said, including the NFC Award, straight transfers, funding for merged districts, counter-terrorism compensation, development spending, and social protection programmes.
NFC Award: No Outstanding Dues
The Ministry of Finance said KP has received its full 100 percent share under the NFC Award since 2010, amounting to Rs 5,867 billion.
Officials clarified that NFC transfers are disbursed every 15 days, leaving no scope for arrears.
On December 17, 2025, the federal government released Rs 46.44 billion to KP under the NFC mechanism, the ministry confirmed.
Additional Share for Terrorism Burden
In recognition of the additional burden of terrorism, KP has been receiving an extra one percent share under the NFC framework since 2010.
According to the Finance Ministry, this has resulted in Rs 705 billion being transferred to the province so far.
Straight Transfers and Royalties
Between 2010 and 2025, the federal government transferred Rs 482.78 billion to KP through straight transfers, including royalties, Gas Development Surcharge (GDS), and excise duties, officials said.
Funding for Merged Districts
Following the merger of former tribal areas, the federal government transferred Rs 704 billion from its own share to KP for the development and administration of the newly merged districts since 2019, according to official figures.
Support for Internally Displaced Persons
The Finance Ministry further stated that an additional Rs 117.166 billion has been provided over the years to support internally displaced persons (IDPs) affected by militancy and security operations.
PSDP Funds Not NFC Arrears
Under the Public Sector Development Programme (PSDP), the federal government has released Rs 115 billion for development projects in Khyber Pakhtunkhwa.
However, fiscal experts stressed that PSDP allocations are performance-based, not automatic liabilities.
“PSDP funds are released strictly on the basis of project progress and physical and financial performance,” experts said, adding that projects with minimal or no progress do not qualify for automatic disbursements.
They warned that presenting unreleased PSDP funds as NFC arrears or federal dues amounts to a misinterpretation of budgetary rules and fiscal discipline.
BISP Transfers to KP Beneficiaries
According to Ministry of Finance data, Rs 481.433 billion was disbursed directly to beneficiaries in Khyber Pakhtunkhwa under the Benazir Income Support Programme (BISP) between 2016 and 2025.
11th NFC and Federal Commitment
The Ministry of Finance said the federal government is taking practical steps to strengthen the NFC framework, including the establishment of the 11th NFC on August 22, 2025, formation of sub-groups, and enhanced provincial consultations.
A sub-group has also been formed to examine the financial implications of the merger of former FATA, the ministry added.
“The federal government’s priority is to provide transparent, fair, and performance-based financial support to Khyber Pakhtunkhwa in addressing challenges related to security, rehabilitation, integration, and development,” the ministry said.
The federal government reiterated its commitment to fiscal federalism and equitable resource distribution, stressing that provincial needs will continue to be addressed through established constitutional mechanisms.
