Khyber-Pakhtunkhwa (KP) Chief Minister Sohail Afridi said persistent delays in federal transfers are pushing the province towards a serious financial crisis, particularly affecting the development of the newly merged districts – the former Federally Administered Tribal Areas (formerly Fata). The chief minister wrote a letter to Prime Minister Shehbaz Sharif expressing serious concern over the continued inability of the federal government to release federal transfers mandated by the Constitution, according to a document released by the Chief Minister’s Secretariat in Peshawar.
"Against Khyber Pakhtunkhwa NFC [National Finance Commission] With an entitlement of Rs 658.4 billion from the Federal Divisible Pool, the province has received only Rs 604 billion to date, leaving a deficit of Rs 54.4 billion," he wrote, according to the document.
"This is not an accounting discrepancy but a material violation that directly impaired cash management, disrupted budget execution and limited service delivery in critical areas of governance. The impact was more severe in the merged districts," he added. The chief minister wrote that the provincial budget for 2025-2026 was developed and approved strictly on the basis of clear constitutional fiscal rights, including net profit of the oil industry, oil and gas royalties, post-Fata merger NFC shares and regular monthly transfers under the NFC award. In the merged districts, he said, development, stabilization and consolidation of the state are recognized as national priorities, but despite the provincial allocation of Rs292 billion, federal releases so far amount to only Rs56 billion.
"This serious and persistent gap has undermined essential public services and development interventions in historically marginalized areas, eroding the objectives of the merger and weakening national cohesion." he warned. Afridi said actual releases have always been lower than budgeted levels, adding that the withholding of routine monthly NFC transfers is not constitutionally sanctioned and undermines the fundamental principles of cooperative federalism. He stressed that the KP remains at the forefront of counter-terrorism operations, while simultaneously shouldering extraordinary and unavoidable expenses related to flood response and rehabilitation, as well as the management and support of Temporarily Displaced Persons (TDPs).
"These are national responsibilities; however, the financial burden continues to be borne disproportionately and unsustainably by the province," he said. "Any further delays would only add to the province’s financial stress and weaken governance capacity at a critical time."
The Chief Minister urged the Federal Government to take immediate remedial measures including full and unconditional release of all unpaid federal dues, especially routine monthly NFC transfers, Hydel net profit, oil and gas royalties and allocations for merged districts.
