PESHAWAR: The Khyber Pak­htunkhwa government has informed the federal government that it has received Rs54.4 billion less funds than its allocated share under National Finance Commission.

Chief Minister Sohail Afridi, in a letter addressed to Prime Minister Shehbaz Sharif, expressed grave concern over persistent failure to release constitutionally mandated federal transfers, which has resulted in fiscal and governance crises for the province.

He said that that the budget of Khyber Pakhtunkhwa 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 NFC Award.

He said that those were binding fiscal obligations and not discretionary assumptions. “Contrary to these commitments, actual releases have consistently fallen short of budgeted level,” he added.

CM writes letter to PM; expresses concern about negative impacts of funds shortfall

The chief minister said that withholding of monthly NFC transfers found no sanction in the Constitution and undermined the core principles of cooperative federalism.

He said that against Khyber Pakhtunkhwa’s NFC entitlement of Rs658.4 billion from the federal divisible pool, the province received only Rs604 billion to date, leaving a shortfall of Rs54.4 billion. He said that it was not an accounting variance but a material breach that directly impaired cash management, disrupted budget execution and constrained service delivery across critical sectors of governance.

Mr Afridi said that the impact was most severe in merged districts where development, stabilisation and state consolidation were recognised national priorities. “Despite a provincial allocation of Rs292 billion, federal releases amount to only Rs56 billion so far,” he said.

He warned that the severe and continuing gap undermined essential public services and development int­erventions in historically marginalised areas, eroding the objectives of merger and weakening national cohesion.

The chief minister said that Khyber Pakhtunkhwa remained 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 those were national responsibilities; however, the financial burden continued to be borne disproportionately and unsustainably by the province.

He 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 for 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.

Published in Dawn, January 27th, 2026