Khyber-Pakhtunkhwa (KP) Chief Minister Sohail Afridi has said that persistent delays in federal transfers are pushing the province towards a serious 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 continued failure of the federal government to release constitutionally mandated federal transfers, according to a handout issued by the Chief Minister’s Secretariat in Peshawar.
"Against Khyber Pakhtunkhwa NFC [National Finance Commission] Entitled to Rs 658.4 billion from the divisible federal fund, the province has received only Rs 604 billion to date, leaving a shortfall of Rs 54.4 billion." he wrote, according to the pamphlet.
"This is not an accounting variance but a material violation that has directly harmed cash management, disrupted budget execution, and limited service delivery in critical governance sectors. The impact has been more severe in the merged districts," he added. The prime minister wrote that the provincial budget for 2025-26 was drafted and approved strictly on the basis of clear constitutional fiscal rights, including Hydel net profits, oil and gas royalties, NFC shares post-Fata merger and regular monthly transfers under the NFC Award. In the merged districts, he said, development, stabilization and state consolidation are recognized as national priorities, but despite the provincial allocation of Rs 292 billion, federal releases amount to only Rs 56 billion, so far.
"This serious and continuing gap has undermined essential public services and development interventions in historically marginalized areas, eroding the goals of the merger and weakening national cohesion." he warned. Afridi said actual releases have always been below budgeted levels, adding that NFC’s withholding of routine monthly transfers finds no sanction in the Constitution and undermines the basic principles of cooperative federalism. He stressed that KP remains on the front line of counter-terrorism operations, while shouldering extraordinary and unavoidable expenses arising from flood response and rehabilitation, as well as the management and support of Temporarily Displaced Persons (TDP).
"These are national responsibilities; However, the financial burden continues to fall on the province in a disproportionate and unsustainable manner," said. "Any further delay would only exacerbate the province’s fiscal stress and weaken governance capacity at a critical time."
The Prime Minister urged the federal government to take immediate corrective measures, including full and unconditional release of all outstanding federal dues, particularly routine monthly NFC transfers, Hydel net profits, oil and gas royalties and allocations for the merged districts.
