Khyber-Pakhtunkhwa (KP) Chief Minister Sohail Afridi has said that persistent delays in federal transfers are pushing the province towards a severe financial crisis, particularly affecting development in the newly merged districts – the former Federally Administered Tribal Areas (ex-Fata). The chief minister has written a letter to Prime Minister Shehbaz Sharif expressing serious concern over the federal government’s continued failure to release constitutionally mandated federal transfers, according to a handout issued by the chief minister’s secretariat in Peshawar.
"Against Khyber Pakhtunkhwa’s NFC [National Finance Commission] entitled to Rs658.4 billion from the Federal Divisible Pool, the province has received only Rs604 billion to date, leaving a deficit of Rs54.4 billion," he wrote according to the handbook.
"This is not an accounting discrepancy, but a material breach that has directly impaired cash management, disrupted budget execution and limited service delivery across critical sectors of governance. The impact has been most severe in the merged districts," he added. The Chief Minister wrote that the provincial budget for 2025-2026 was prepared and approved strictly on the basis of clear constitutional fiscal rights, including net hydel profit, 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 state consolidation are recognized as national priorities, but despite the provincial allocation of Rs292 billion, the federal releases so far amount to only Rs56 billion.
"This severe and persistent divide has undermined essential public services and development interventions in historically marginalized areas, eroded the goals of merger and weakened national cohesion," he warned. Afridi said actual releases have consistently been below budgeted levels, adding that the withholding of routine monthly NFC transfers finds no sanction in the Constitution and undermines the core principles of cooperative federalism. He emphasized that the KP remains at the frontline of counter-terrorism operations while shouldering extraordinary and unavoidable expenses stemming from flood response and rehabilitation, as well as management and support for Temporarily Displaced Persons (TDPs).
"These are national responsibilities; but the financial burden continues to be borne disproportionately and unsustainably by the province," he said. "Any further delay will only exacerbate the province’s fiscal stress and weaken government capacity at a critical time."
The chief minister urged the federal government to take immediate corrective action including full and unconditional release of all outstanding federal dues, particularly routine monthly NFC transfers, net hydel profit, oil and gas royalties and allocations to the merged districts.
