• Muzzammil rails against 27th Amendment push, calls its timing ‘bad signal’
• Says federal ‘miscalculations’, not NFC, drove debt, interest surge
• Insists Centre’s ‘lust for money’ won’t end even if provincial shares are cut

ISLAMABAD: Dismissing the Centre’s claim of fiscal constraints necessitating a readjustment of resource sharing through the proposed 27th Constitutional Amendment, the Khyber Pakhtunkhwa government has instead demanded accountability for the federal government’s “bad economic decisions” that have led to a huge buildup in interest payments.

Speaking at a news conference, KP’s Finance Minister Muzzammil Aslam smelled a rat behind the 27th Constitutional Amendment, which he said was being introduced at a time when the National Finance Commission (NFC) had been constituted and its meeting repeatedly scheduled and deferred.

“It’s a bad signal,” he said, adding that the NFC meeting was slated for August, then fixed for September and then postponed to November.

He said a tentative date was conveyed for Nov 10, but revised to Nov 18 due to ‘someone’s non-availability’, but even the revised schedule has not been notified yet, raising question marks.

“On the one hand, you are calling the NFC meeting and, on the other, you are talking about a constitutional amendment to reduce NFC shares,” he said.

Mr Aslam said the entire narrative for removing protection of provincial shares in the National Finance Commission through the 27th Amendment was based on a wrong premise that more than 57.5 per cent of finances out of Rs14.131 trillion federal proceeds flowed to the provinces, leading only 42pc for the federal government to cater for interest payments and other responsibilities.

“This is intellectual dishonesty,” he said, adding that 100pc of more than Rs5.147tr worth of non-tax revenues were retained by the Centre.

The total federal resources, including tax and non-tax revenues, thus worked out to Rs19.278tr in FY26, of which only Rs8.2tr or 42.7pc was earmarked to provinces, leaving a massive Rs11.072tr or more than 57pc with the federal government.

Mr Aslam said the Centre had by design imposed Rs1.5tr worth of petroleum development levy instead of general sales tax to deprive provinces of their legitimate fiscal right, while over Rs2.5tr profit of the State Bank of Pakistan was also not shared with provinces.

In addition, the KP government was not getting the rightful fiscal share on account of the merged tribal districts, he added.

He said the NFC shares should be revised vertically to see if 42pc federal share was justified while it was trying to reclaim education, population and social welfare sectors from the provinces even as it claims to be reducing the government’s footprint under the IMF programme.

He lamented that the wheat flour movement to KP was being blocked or discouraged in violation of Article 151 of the Constitution, while 90pc of the Rs700bn subsidy on fertiliser was being spent in Punjab and Sindh.

He said the total budgeted expenditure of the federation amounted to Rs17.583tr, which should ensure at least 20pc funds (Rs3.5tr) for the development programme to improve citizens’ living standards, but only Rs1tr was allocated to development, which too was being reduced to Rs700bn.

This, he said, contradicted the claims of the federal ministers about great successes in the economic field, adding that Rs700bn for development out of more than Rs17.5tr total resources itself explained the situation.

The pertinent question for the federal government was to where all these resources were going given the fact that interest payments at 11pc markup for the current year are estimated at Rs8.2tr compared to Rs8.9tr last year at 22pc markup. “Markup rate has halved but interest payments remain unchanged,” he noted.

Mr Aslam said inadequate resources were allocated to the defence budget that stood at Rs2.550tr this year, while Rs1.055tr had been set aside for pensions because pensions of armed forces personnel had also been shifted to the civil budget. He said the Centre’s fiscal deficit amounted to around Rs6tr.

“Why is the Centre doling out Rs1.928tr in grants and Rs1.186tr in subsidies when it is facing fiscal constraints?” he questioned, adding that the federal government’s “lust for money” would never end even if resources were withdrawn from the provinces.

Mr Aslam said the federal government should be held accountable for its “economic mistakes” and its price should not be charged to the people and the provinces.

Giving an example, he said the federal government adopted a faulty economic policy through lopsided agreements with independent power producers (IPPs) in 2025, which had consumed more than Rs5.1tr payments made from people’s pockets.

“Centre could not be allowed to make an economic mistake each year and shift its burden to the people and the provinces,” he said.

Likewise, the LNG contracts were made and cargoes were being refused and sold in the market at a loss to the government.

The KP minister said the Centre had acquired more than Rs23.5tr debt in four years but did not spend even Rs4tr on development, which meant it was borrowing for interest payments.

“This demands accountability,” he said, adding that the federal debt was being reported at Rs78tr while it was actually Rs94tr as liabilities were not properly being accounted for.

He said the total investment inflow amounted to $447m in the first quarter of the current year, while $751m profits and dividends flowed out, which meant the investment terms were not favourable to Pakistan.

Published in Dawn, November 6th, 2025