ISLAMABAD:
On Tuesday, the federal and Khyber-Pakhtunkhwa governments settled their differences over the release of funds for the merged districts, but remained at loggerheads over the provision of an additional Rs 15 billion sought by provincial authorities for temporarily displaced persons (TDPs).
Following a tense meeting between KP Chief Minister Sohail Afridi and Prime Minister Shehbaz Sharif a day earlier, the political arch-rivals appeared to be overcoming their differences over the release of non-NFC funds.
KP Chief Minister’s Finance Advisor Muzzammil Aslam met Finance Minister Muhammad Aurangzeb and Planning Minister Ahsan Iqbal separately.
The KP government has demanded immediate disbursement of annual development plan and Accelerated Implementation Program (AIP) funds for the merged districts of the province.
Planning Minister Ahsan Iqbal said his ministry had already authorized the release of Rs 7 billion and asked KP officials to take up the matter with the federal Finance Ministry for immediate disbursements.
However, there was a lack of commitment from the federal government to provide the additional Rs 15 billion that KP is seeking to meet the needs of the temporarily displaced population of various regions due to intelligence-based operations to flush out terrorists.
The KP government has demanded that the federal government provide Rs 15 billion for provision of services and food to temporarily displaced people from Bajaur, Khurram and Tirah Valley, Muzzammil Aslam said after meeting federal cabinet ministers.
Aslam, however, said the Finance Ministry told him it did not have additional funds due to fiscal constraints.
“We have already spent Rs 10 billion on TDP in this fiscal year, and another Rs 15 billion is needed, but the provincial government is also facing fiscal constraints,” the financial advisor said.
It was decided to initially pay Rs 265,000 per displaced family to about 19,000 households, Muzzammil said.
Aslam said he also asked for Rs 4.5 billion for the running costs of the Bakakhel camp in North Waziristan, which remains operational and serves 2,000 displaced families.
The financial advisor said another 15,000 displaced families from North Waziristan are residing with host families. He said the monthly allocation of Rs 20,000 for 17,000 families amounts to Rs 348 million per month, which the KP government has been paying since 2022.
The advisor said the KP government had incurred expenses of Rs 19 billion in the past, and an additional Rs 10.4 billion was spent this fiscal year due to Bajaur and Tirah Valley operations. However, the federal government has not made any disclosures, he added.
The federal government has denied any large-scale operations anywhere in KP, but said intelligence-based operations were ongoing, with an average of 200 such operations daily across the country.
Due to the harsh weather conditions, no large-scale military operations have been launched.
The KP government drew attention to outstanding obligations regarding displaced families and other related commitments that require streamlined coordination and resolution, according to a statement issued by the Ministry of Finance after the meeting.
The provincial government also informed the federal authorities about the funding needs of the merged districts, which are the direct responsibility of the Centre.
The current full budget estimate for fiscal year 2025-26 stands at Rs 143 billion, excluding TDPs. On the contrary, the federal government has allocated only Rs 80 billion for the current expenditure budget, which is even less than the actual expenditure of the last fiscal year in these districts.
But Iqbal said that during the four years of PTI rule, the annual funding of the newly merged districts remained frozen at Rs 24 billion, which he said has increased to Rs 28 billion per year under the current government.
The Planning Minister also ruled out any discrimination against the KP government and said that the actual releases were higher than those made during the PTI rule.
The Planning Minister said there would be joint ownership of the Accelerated Implementation Program (AIP) for the development of the merged districts but the steering committee would be chaired by KP Chief Minister Sohail Afridi.
Iqbal said the KP government was asked to convene a steering committee meeting to approve new projects for the fourth quarter. He argued that the federal government wanted to fund high-impact, youth-focused projects in these merged districts.
We have agreed to disburse funds for the AIP, including Rs 7,000 million for police training, Iqbal said.
The Planning Minister said that of the annual allocation of Rs 16.8 billion under the annual development plan, the money has already been disbursed for the first two quarters. He said the KP government has been asked to guarantee the disbursements from the Federal Ministry of Finance as the Planning Ministry has already authorized the funds.
In an official statement, the Ministry of Finance said that Muhammad Aurangzeb met Muzzammil Aslam.
The KP team highlighted operational and developmental imperatives in the merged districts and underlined the importance of predictable and timely releases to sustain ongoing plans and meet pressing needs on the ground, according to the Ministry of Finance.
The discussion focused on a range of fiscal and development issues, including the timely release of funds under key development heads for the merged districts, outstanding requirements related to the rehabilitation and support of temporarily displaced people, and the broader framework of provincial entitlements and allocations, including those related to the NFC, it added.
The Federal Minister of Finance and Revenue heard the issues raised by the KP delegation and reaffirmed the federal government’s commitment to cooperative federalism and constructive engagement with the provinces.
Aurangzeb assured the KP team of the support of the Finance Division in pursuing and facilitating their legitimate claims for allocations under the NFC and other relevant heads discussed during the meeting, in accordance with applicable rules, agreed frameworks and due process.
The KP government had demanded clearance of Rs 426 billion in non-NFC arrears, including a net Hydel profit of Rs 85 billion, and asked to expedite the process for release of Hydel profits.
The federal Finance Minister noted that effective coordination and timely reconciliation of accounts, where necessary, remain essential for smooth and transparent releases, and emphasized that the federal government remains cognizant of the unique development and security-related challenges facing KP, particularly in the merged districts.
Both sides agreed to continue close coordination through relevant technical forums and channels to address outstanding issues on a priority basis and ensure that tax agreements and reliefs support development objectives, service delivery and stability, the Finance Ministry said.
