KP warns of fiscal stress as federal transfers fall short by Rs54bn

Khyber-Pakhtunkhwa Chief Minister Sohail Afridi has warned that delays in federal transfers are pushing the province toward a financial crunch, with the impact most pronounced in the newly merged districts of the former FATA.

In a letter to Prime Minister Shehbaz Sharif, the chief minister said the federal government has not released constitutionally mandated funds, according to a statement from the Chief Minister’s Secretariat.

He said KP’s entitlement from the Federal Divisible Pool under the National Finance Commission stood at Rs658.4 billion, but the province had received only Rs604 billion so far, leaving a shortfall of Rs54.4 billion. The gap, he said, has disrupted cash management, budget execution and service delivery.

Afridi said the provincial budget for FY26 was framed on the basis of assured constitutional transfers, including net hydel profit, oil and gas royalties, post-merger NFC shares and regular monthly NFC releases.

He added that development in the merged districts—identified as a national priority—has been particularly affected. Against a provincial allocation of Rs292 billion, federal releases have so far amounted to only Rs56 billion, he said, warning that the shortfall has weakened public services and slowed development in historically under-served areas.

The chief minister said routine withholding of monthly NFC transfers had no constitutional basis and undermined cooperative federalism. He also pointed to additional pressures on the province from counter-terrorism operations, flood response and rehabilitation, and support for temporarily displaced persons.

Afridi urged the federal government to immediately release all outstanding dues, including pending NFC transfers, net hydel profit, oil and gas royalties and allocations for the merged districts, warning that further delays would intensify fiscal stress and strain governance capacity.