The ministry says that 46.44 billion Rs was released this month and PSDP funds cannot be counted as NFC arrears
The federal government on Saturday rejected allegations that it had withheld funds from Khyber-Pakhtunkhwa, saying the province has received its full share under the National Finance Commission Award through regular fortnightly transfers and no outstanding liabilities exist.
The clarification followed allegations by Khyber-Pakhtunkhwa Chief Minister Sohail Afridi that federal funds, particularly for the merged tribal districts, had stalled, with alleged arrears of Rs2.2 trillion.
Speaking while presiding over the 43rd provincial assembly in Peshawar, Afridi accused the federal government of delaying the release of NFC funds for the financial year 2025-26, saying the non-release had disrupted development projects in the merged districts. He said the province’s NFC share for the current financial year had not been released so far, despite Khyber-Pakhtunkhwa fulfilling its constitutional obligations.
The Ministry of Finance outlines the grants
In response, the finance ministry said that under the 7th National Finance Commission award, Khyber-Pakhtunkhwa’s share in the divisible pool was fixed at 14.62%, with an additional percentage point allocated to compensate for the province’s role in the war on terrorism. It said the award continues to be implemented as provinces have yet to reach consensus on subsequent NFC arrangements.
The federal government, Khyber Pakhtunkhwa, and the National Finance Commission (NFC) also ensure timely, transparent and continuous financial resources in addition to
The purpose of this campaign is to fulfill the financial needs of the province.
— Ministry of Finance, Government of Pakistan (@Financegovpk) 20 December 2025
In evidence of the regular transfer mechanism, the ministry said that Rs 46.44 billion was released to Khyber-Pakhtunkhwa on December 17, 2025 as per the routine fortnightly disbursement schedule under the NFC framework.
According to official figures, Khyber-Pakhtunkhwa received Rs 5,867 billion as its NFC share between July 2010 and November 2025. Another Rs 705 billion was provided during the same period to cover costs associated with the war on terrorism.
Read: Can the war on terror be won without political consensus?
Following the merger of the former Federally Administered Tribal Areas with Khyber-Pakhtunkhwa, the federal government transferred Rs 704 billion from its share between 2019 and 2025 to cover administration and development expenses in the newly merged districts.
In addition to NFC allocations, the province received Rs 482.78 billion through constitutionally mandated direct transfers, including royalties on oil and gas, gas development allowances, excise duties on natural gas and other federal revenue streams.
The ministry said additional federal support included Rs117.166 billion for IDPs, Rs115 billion released for provincial development projects under the Public Sector Development Program and Rs481.433 billion disbursed in conditional and unconditional cash transfers under the Benazir Income Support Program between fiscal year 20256.
The ministry clarified that PSDP allocations are linked to project approval and progress and fall outside the NFC portions, adding that delays in PSDP releases cannot be treated as provincial arrears.
The federal government highlighted that the figures show that federal financial obligations to KP have been met in full and consistently, disproving claims of stopped or withheld funds.
Read more: FATA Jirga in Tirah rejects KP merger
The ministry said the establishment of the 11th NFC on August 22, 2025 reflects the federal government’s commitment to resolve outstanding issues through consultation, adding that a sub-group has been formed to examine the economic implications of the merger of erstwhile FATA.
The federal government reiterated its commitment to fiscal federalism and equitable resource distribution and said provincial needs related to security, rehabilitation, integration and development would continue to be addressed through established constitutional mechanisms.
