ISLAMABAD: The next meeting of the National Finance Commission (NFC) is likely to be delayed as the working groups constituted to draft key recommendations have yet to complete their work, well-informed sources told Business Recorder.
During the first meeting of the Commission held on December 4, it was decided to form several working groups to deliberate on various aspects of the forthcoming NFC award. The Commission had tentatively planned to convene again on January 8 or January 15.
However, sources said the working groups have made limited progress so far, making it difficult to consolidate recommendations within the proposed timeframe. As a result, the next session of the Commission may be delayed until preliminary reports are finalised.
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The NFC is mandated to build consensus on the distribution of financial resources between the federation and the provinces — a technically complex process requiring extensive analysis and negotiations among stakeholders. Any delay in meetings could prolong discussions on the next NFC award, which is critical for both federal and provincial fiscal planning, sources added.
The working groups constituted by the NFC include those on national debt composition and utilisation, sharing of financial expenditures incurred by the federation in areas under provincial jurisdiction, composition of divisible pool taxes, determination of resource-sharing percentages, measures to improve the overall tax-to-GDP ratio, straight transfers of resources to provinces, merger of the erstwhile Federally Administered Tribal Areas (FATA) and its share in the NFC and population-related issues.
The maiden meeting of the NFC working group on the merger of former FATA — now referred to as the Newly Merged Districts (NMDs) — and their share in the federal divisible pool was held on December 23 to formulate recommendations for the next NFC award.
Sources said the Khyber Pakhtunkhwa (KP) government reiterated its position that the existing NFC award must be revised to meet constitutional requirements following the merger of former FATA with KP. The province called for the merged districts to be treated as a separate component in future NFC awards, with allocations calculated independently on the basis of population, poverty, and other development indicators.
The KP also demanded compensation for the period from 2019–20 to 2025–26, during which it claims the financial share of the merged districts was not fully reflected in NFC allocations. In addition, the province proposed the establishment of a 10-year special grant from the federal divisible pool to address what it termed “historical development deficits” in the merged districts. However, the working group is yet to finalize its recommendations.
Earlier, KP Chief Minister Sohail Afridi accused the federal government of stalling development in the merged tribal districts by failing to disburse funds under the NFC resource-distribution formula for the current fiscal year.
The Ministry of Finance, however, rejected the allegations, stating that KP continues to receive its due share, including the additional allocation for the war on terror. Provincial NFC shares are released on a fortnightly basis and no outstanding liabilities exist in this regard, the ministry added.
Copyright Business Recorder, 2026
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