Federal govt ensures timely and sustained transfer of funds to KP, says finance ministry

Islamabad (Web Desk): The Ministry of Finance on Saturday stated that the federal government remains committed to ensuring timely, transparent, and consistent financial support to Khyber Pakhtunkhwa (KP), in accordance with the National Finance Commission (NFC) Award and beyond.

This, the ministry said, underscores the Federation’s dedication to promoting provincial development, maintaining fiscal stability, and aiding post-conflict rehabilitation.

Under the 7th NFC Award, KP’s share was fixed at 14.62% of the provincial allocation from the divisible pool. Recognizing the exceptional challenges the province faced during the War on Terror (WoT), an additional 1% of the undivided pool was allocated exclusively to KP, according to the finance ministry’s statement.

Although the 7th NFC Award was intended for a five-year period, delays in reaching agreement on subsequent awards meant that its framework has continued to guide federal transfers. As a result, KP continues to receive its rightful share, including the extra allocation for the War on Terror.

The statement highlighted that provincial NFC disbursements are made every fortnight, with no pending liabilities. Most recently, Rs46.44 billion was transferred to the KP government on December 17, 2025, reflecting the federal government’s commitment to timely payments.

As per the statement, from July 2010 to November 2025, KP has received a total of Rs5,867 billion from the divisible pool. During the same period, Rs705 billion was additionally provided to acknowledge the province’s sacrifices and responsibilities during the War on Terror.

Beyond the NFC allocations, the federal government has ensured steady direct transfers to KP.

Between July 2010 and November 2025, Rs 482.78 billion was sent for royalties on oil and natural gas, gas development surcharges, excise duties on natural gas, and other related revenue streams.

Acknowledging KP’s distinct fiscal and administrative challenges, the federal government has provided substantial support outside the NFC framework.

Following the merger of former FATA into KP, and in the absence of a new NFC formula, the federal government has been financing the expenditures of the Newly Merged Districts (NMDs) from its own NFC share.

Since 2019, Rs704 billion has been allocated for NMDs. An additional Rs117.166 billion has also been provided over the years to assist internally displaced persons.

Despite constitutional devolution, the federal government continues to invest in KP’s welfare and development, allocating Rs115 billion from the Federal Public Sector Development Programme (PSDP) over the past 15 years for projects of provincial significance.

 Through the Benazir Income Support Programme (BISP), Rs481.433 billion has been spent in KP from FY 2016 to FY 2025 on unconditional and conditional cash transfers, providing crucial support to vulnerable households.

The ministry also highlighted its commitment to strengthening the NFC framework through inclusive consultation.

The 11th NFC, constituted by the President on 22 August 22, 2025, held its first meeting on 4 December 2025. During this session, a dedicated Sub-Group was established to make recommendations on the merger of former FATA/NMDs and their share in the divisible pool.

At the request of the KP government, the Sub-Group’s first meeting is scheduled for 23 December 2025, with KP’s Finance Minister serving as convener, demonstrating a collaborative and transparent approach to fiscal matters.

Reaffirming its position, the finance ministry stressed that the federal government remains fully committed to fair resource distribution, fiscal federalism, and ongoing support for KP, ensuring that the province’s needs—particularly those arising from security concerns, displacement, and administrative integration—are addressed promptly and responsibly.