ISLAMABAD:
The federal and Khyber-Pakhtunkhwa governments on Tuesday resolved 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 main political rivals appeared to have overcome their differences over the release of unfunded funds from the National Finance Commission (NFC).
Financial Advisor to KP Chief Minister Muzzammil Aslam met Finance Minister Muhammad Aurangzeb and Planning Minister Ahsan Iqbal separately.
The KP government has demanded immediate disbursement of funds under the Annual Development Plan and Accelerated Implementation Program (AIP) for the merged districts of the province.
Planning Minister Ahsan Iqbal said his ministry had already authorized the release of Rs7 billion, asking KP officials to approach the Federal Finance Ministry for immediate disbursement.
However, the federal government has not shown some commitment to provide the additional Rs 15 billion that KP is seeking to meet the needs of the temporarily displaced population from various areas due to intelligence-based operations aimed at flushing out terrorists.
The KP government has demanded that the federal government provide Rs 15 billion for provision of services and food to the temporarily displaced people of Bajaur, Khurram and Tirah Valley, Muzzammil Aslam said after meeting federal ministers.
Aslam, however, said the Finance Ministry had told him it did not have additional funds due to budgetary constraints.
“We have already spent Rs 10 billion on TDP this financial year, and another Rs 15 billion is required, but the provincial government is also facing budgetary constraints,” the financial advisor said.
It was decided to initially pay Rs 265,000 per displaced family to around 19,000 households, Muzzammil said.
Aslam said he had also requested 4.5 billion rupees for the running costs of the Bakakhel camp in North Waziristan, which continues to be operational and hosts 2,000 displaced families.
The financial advisor said another 15,000 displaced families from North Waziristan are staying with host families. He said the monthly allocation of Rs20,000 for 17,000 families amounts to Rs348 million per month, which the KP government has been bearing since 2022.
The advisor said that Rs 19 billion expenditure was incurred by the KP government in the past, and another Rs 10.4 billion was spent in this financial year due to Bajaur and Tirah Valley operations. However, no publication has been made by the federal government, he added.
The federal government denied any large-scale operations in any part of KP, but said intelligence-led operations were underway, with an average of 200 such operations per day across the country.
Due to harsh weather conditions, large-scale military operations were not launched.
The KP government drew attention to the pending obligations regarding displaced families and other related commitments which require streamlined coordination and resolution, according to a statement issued by the Ministry of Finance after the meeting.
The provincial government has also informed the federal authorities about the funding requirements of the merged districts, which fall directly under the Centre’s responsibility.
The current full budget estimate for the financial year 2025-26 stands at Rs 143 billion, excluding TDP. In contrast, the federal government has allocated only Rs 80 billion in 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 PTI’s four years in office, annual funding for the newly merged districts remained frozen at Rs24 billion, which he said had increased to Rs28 billion annually under the current government.
The planning minister also ruled out any discrimination against the KP government and said the actual releases were higher than those carried out during the PTI tenure.
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 had been asked to convene the steering committee meeting to approve the 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 agreed to disburse funds for the AIP, including Rs7 billion for police training, Iqbal said.
The planning minister said that out of the annual allocation of Rs16.8 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 ensure disbursements from the Federal Ministry of Finance, since the Planning Ministry has already approved the funds.
In an official statement, the Finance Ministry said that Muhammad Aurangzeb met Muzzammil Aslam.
The KP team highlighted the operational and developmental imperatives in the merged districts and stressed the importance of predictable and timely releases to support ongoing programs and meet pressing needs on the ground, according to the Ministry of Finance.
The discussion covered a range of fiscal and development issues, including timely release of funds under key development officers for the merged districts, outstanding requirements related to rehabilitation and support of temporarily displaced persons, and the broader framework of provincial entitlements and allocations, including those related to the NFC, it added.
The Federal Minister of Finance and Revenue listened to 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 to pursue and facilitate their legitimate demands for allocations under the NFC and other concerned 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 non-NFC arrears, including Rs 85 billion net profit on the hydel industry, and had asked to expedite the process of releasing profits from the hydel industry.
The Federal Finance Minister noted that effective coordination and timely reconciliation of accounts, where applicable, remain essential for smooth and transparent releases, and stressed that the Federal Government remains cognizant of the unique developmental and security 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 priority and to ensure that fiscal arrangements and releases support development objectives, service delivery and stability, the Ministry of Finance said.
