Khyber Pakhtunkhwa (KP) has received a total of Rs6.57 trillion from the federal divisible pool since July 2010, which includes its share under the National Finance Commission (NFC) Award, as well as additional compensation for War on Terror-related expenditures, according to data shared by the Ministry of Finance.
The finance ministry said that the federal government transferred Rs5.87 trillion to KP from July 2010 to November 2025 as its share under the NFC Award. This amount was supplemented by an additional Rs705 billion allocated to the province to cover the financial impact of the War on Terror.
Under the 7th NFC Award, KP’s share was set at 14.62% of the provincial share in the divisible pool. In recognition of the province’s significant burden due to the War on Terror, an additional 1% of the undivided divisible pool was allocated specifically to KP.
Although the 7th NFC Award was initially intended to last five years, continued implementation of this framework has been necessary due to the absence of consensus on subsequent NFC Awards. As a result, KP continues to receive its share, including the extra 1% allocation for its War on Terror-related costs.
The Ministry of Finance noted that federal government transfers to KP have been made on a fortnightly basis without any outstanding liabilities. On December 17, 2025, the federal government released Rs46.44 billion to KP, reflecting its commitment to timely disbursements.
In addition to NFC transfers, the federal government has also provided Rs482.78 billion to KP between July 2010 and November 2025 for royalties on oil and natural gas, gas development surcharges, excise duties on natural gas, and other related items.
Following the merger of former FATA into KP, the federal government has been financing the expenditures for the newly merged districts (NMDs) from its own NFC share. Since 2019, Rs704 billion has been transferred to KP for NMDs and Rs117.17 billion to support Internally Displaced Persons (IDPs) in the region.
The Ministry of Finance further highlighted that the federal government has allocated Rs115 billion from the Federal Public Sector Development Programme (PSDP) over the last 15 years for provincial development projects.
Additionally, the Benazir Income Support Programme (BISP) has disbursed Rs481.43 billion in conditional and unconditional cash transfers to KP between FY2016 and FY2025.
The federal government remains committed to ensuring equitable resource distribution through the NFC framework. In this regard, the 11th NFC was constituted in August 2025, with its first meeting held in December 2025. The sub-group set up during this meeting will focus on addressing the fiscal integration of former FATA districts and their share in the divisible pool. A meeting with KP’s finance minister as the convener is scheduled for December 23, 2025, to discuss these issues further.
Meanwhile, KP’s Chief Minister, Muhammad Suhail Afridi, recently raised concerns over unpaid amounts owed to the province, stating that the federal government owes over Rs2,200 billion for net hydel profit (NHP) and an additional Rs1,375 billion for the NFC share related to the merged districts of former FATA.
