Federal govt cites fiscal constraints, declines Rs10 billion cost-sharing for KP displaced families rehabilitation

The federal government has told Khyber Pakhtunkhwa (KP) that it is not in a position to share the estimated Rs10 billion cost incurred by the province on the rehabilitation of displaced families, citing fiscal constraints.

According to media reports, this was conveyed during a meeting between Federal Minister for Finance and Revenue Muhammad Aurangzeb and KP’s Adviser to the Chief Minister on Finance Muzamil Aslam, along with senior officials from the Finance Division and the provincial government.

Speaking after the meeting, Aslam said KP had spent around Rs10 billion on displaced persons and requested cost-sharing from the federal government, but was informed that the centre could not assume the financial burden due to budgetary pressures.

The KP delegation also raised the issue of pending provincial receipts under various heads, including the National Finance Commission (NFC) Award, the Accelerated Implementation Programme (AIP) and net hydel profit.

Aslam said KP was entitled to approximately Rs689 billion under the NFC Award but had received Rs634 billion so far, leaving a shortfall of about Rs55 billion. He added that the matter had been discussed and now required reconciliation by the Federal Board of Revenue.

The adviser further said the province reiterated its claim of around Rs78 billion annually in net hydel profit. In response, the federal government indicated it could release up to Rs3 billion per month under the head, given fiscal limitations.

Delays in AIP payments and funds for merged districts were also discussed with Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal. According to Aslam, the planning minister assured resolution of these issues and directed that the relevant committee be convened to approve new schemes and release pending AIP payments.

Meanwhile, an official statement from the Finance Division said the meeting reviewed rehabilitation needs of displaced persons, funding requirements for merged districts, and outstanding provincial entitlements, including NFC-related matters.

The KP team underscored the need for predictable and timely fund releases to sustain development projects and meet operational requirements in the merged districts. Federal authorities reiterated their commitment to cooperative federalism and assured support in pursuing provincial claims in line with agreed frameworks and due process.

Both sides agreed to continue coordination through technical forums to resolve outstanding issues and facilitate timely releases linked to development and service delivery.