PESHAWAR: The Khyber Pakhtunkhwa government has warned that it will not agree to any further extensions to the 7th National Finance Commission award over changes to the province’s population and poverty numbers following the merger of the Federal Administrative Tribal Areas (now tribal districts) with the province.

“We made multiple contacts to the finance ministry, including phone calls and letters, on the NFC issue, with the most recent communication on Sept 27, but got no reply,” adviser to the Khyber Pakhtunkhwa chief minister on finance Muzammil Aslam told Dawn.

He said that though the provincial government’s budget had posted a surplus, it won’t forgo its due share in the NFC award.

In a letter, a copy of which is available with Dawn, the finance department informed the finance ministry that the province faced financial issues after the merger of the federally and provincially administered tribal areas with it in 2018.

Complains finance ministry didn’t reply to repeated communications on matter

It complained that for the last almost six years since the Fata-KP merger, more than 6.1 million residents from the merged districts hadn’t been accommodated in the intergovernmental funds transfer mechanism under the NFC award.

The department added that provincial Chief Minister Ali Amin Khan Gandapur, in a tribal jirga on Sept 5, highlighted the problems facing the residents of tribal districts following the 25th Constitutional Amendment.

It pointed out that besides discussing other financial and administrative issues, the jirga also advocated for engaging with the federal government to claim the province’s share in national resources justified after the Fata-KP merger as well as ensure the timely provision of funds.

“The legal framework made NFC a principal forum, a robust feature of the federal structure but it was observed with grave concern that the intended process of continual consultation hadn’t been materialised.

“It is also in our knowledge that the 25th Constitutional Amendment is based on the premise of mainstream and addressing the historical development lag that these areas have faced in the first 70 years of the country’s history. The task given to this province is not only daunting but also beyond our present financial capacity,” the finance department argued in the letter.

It added that the federal government had promised to foot the bill of the “herculean task” but that “resolve” appeared to have lost steam over the years.

The department pointed out that not only were the allocations and releases in the 10-year development plan, Accelerated Implementation Programme, shrinking but the province was also being left cash-starved on many other sources of federal fiscal transfers.

It argued that the 7th NFC award did not allocate any designated funds to Fata though it remained a federally administered territory, while the award equalisation provided higher per capita allocations to Balochistan and recognised various needs of other provinces in the formula.

“While all four provinces started receiving higher amounts of funds under the 7th NFC award, Fata, by and large, continued with its historical level public expenditures, resulting in much lower levels of development,” the finance department complained in the letter.

It added that the discrepancy was calculated for the period from 2010-11 to 2023-24 using the per capita funds available to Balochistan.

The department insisted that Fata received meagre investment under the NFC award, leading to underdevelopment, low economic base and fewer job opportunities in the region.

It also pointed out that even if the case of low investment in Fata was not calculated for seven decades before its merger with KP, the matter needed an urgent correction.

The finance department urged the finance ministry to convene a NFC meeting, saying it is a matter of grave concern that the 7th NFC award is no longer compliant with the Constitution.

Published in Dawn, November 9th, 2024