PESHAWAR: Chief Minister of Khyber Pakhtunkhwa, Muhammad Sohail Afridi, has written a detailed letter to the Prime Minister of Pakistan expressing grave concern over the persistent failure to release constitutionally mandated federal transfers, which has resulted in an acute fiscal and governance crisis for the province.
In his letter, the CM stated that the Provincial Budget for Fiscal Year 2025–26 was framed and approved strictly on the basis of clear constitutional fiscal entitlements, including Net Hydel Profit, Oil and Gas Royalties, post-merger National Finance Commission shares, and regular monthly transfers under the NFC Award.
He emphasized that these were binding fiscal obligations and not discretionary assumptions. Contrary to these commitments, actual releases have consistently fallen short of budgeted levels.
He further highlighted that the withholding of routine monthly NFC transfers finds no sanction in the Constitution and undermines the core principles of cooperative federalism.
The CM noted that against Khyber Pakhtunkhwa’s NFC entitlement of Rs 658.4 billion from the federal divisible pool, the province has received only Rs 604 billion to date, leaving a shortfall of Rs 54.4 billion.
He stressed that this is not an accounting variance but a material breach that has directly impaired cash management, disrupted budget execution, and constrained service delivery across critical sectors of governance.
He further pointed out that the impact has been most severe in the Merged Districts, where development, stabilization, and state consolidation are recognized national priorities.
Despite a provincial allocation of Rs 292 billion, federal releases amount to only Rs 56 billion so far. He warned that this severe and continuing gap has undermined essential public services and development interventions in historically marginalized areas, eroding the objectives of the merger and weakening national cohesion.
The CM also underscored that Khyber Pakhtunkhwa remains on the frontline of counter terrorism while simultaneously shouldering extraordinary and unavoidable expenditures arising from flood response and rehabilitation, as well as the management and support of Temporarily Displaced Persons. He stated that these are national responsibilities; however, the financial burden continues to be borne disproportionately and unsustainably by the Province.
In view of these circumstances, the CM urged the Federal Government to take immediate corrective action, including the full and unconditional release of all outstanding federal dues, particularly routine monthly NFC transfers, Net Hydel Profit, Oil and Gas Royalties, and allocations for the Merged Districts, strictly in accordance with constitutional provisions and agreed fiscal arrangements.
He cautioned that any further delay would only compound the Province’s fiscal stress and weaken governance capacity at a critical juncture.
Copyright Business Recorder, 2026
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