Table of Contents
- 1. Breaking: Pakistan’s Finance Ministry Defends,Delivers NFC Shares to KP; Sets Stage for Merger Talks
- 2. Key points from the government’s position
- 3. Continued implementation of the 7th NFC Award
- 4. Recent disbursements and historic transfers
- 5. Further steps to resolve fiscal matters
- 6. Table: snapshot of key NFC figures and transfers
- 7. Why this matters-and what to watch next
- 8. Evergreen takeaways
- 9. Core claim: All national Finance Commission (NFC) allocations for the 2025‑26 fiscal year were transferred to Khyber Pakhtunkhwa (KP) on schedule, meeting the 30 June 2025 deadline stipulated in the NFC Award.
The Ministry of Finance on Saturday asserted that the federal government has been releasing provincial shares under the National Finance Commission on a fortnightly schedule and that there are no outstanding liabilities tied to this process.
The statement followed a row over funds for the merged tribal districts, with KP Chief Minister Sohail Afridi alleging that stalled NFC disbursements were hampering development in the region.
Key points from the government’s position
Officials reaffirmed the federal government’s commitment to timely, obvious financial transfers to Khyber Pakhtunkhwa (KP) under the NFC framework and beyond.
under the 7th NFC Award, KP’s share was set at 14.62% of the provincial share in the divisible pool. The government noted an additional one percent of the undivided pool was allocated to KP to acknowledge the heavy burden of security operations.
Continued implementation of the 7th NFC Award
Even tho the 7th NFC Award was intended to span five years, discord over new NFC awards (8th, 9th, and 10th) led to the decision to keep applying the 7th award framework. KP continues to receive its due share, including the extra allocation for security operations.
The ministry emphasized that provincial NFC shares are released on a fortnightly basis and that there are no outstanding liabilities.
Recent disbursements and historic transfers
Officials highlighted a Dec. 17 transfer of Rs 46.44 billion to the KP government, underscoring the government’s commitment to timely disbursements.
From July 2010 to November 2025, KP received a total of Rs 5.867 trillion as its share of the divisible pool. Of this, Rs 705 billion was allocated for the war on terror as part of the federal response to security challenges.
Additionally, Rs 482.78 billion was transferred directly to KP between July 2010 and November 2025 through royalties on oil and gas, gas development surcharge, excise duties, and related streams.
In recognizing KP’s unique fiscal and administrative hurdles, the Center also noted extended support beyond the NFC framework, including financing for the merged districts after FATA’s merger, with Rs 704 billion transferred as 2019.
An extra Rs 117 billion was provided over the years to assist internally displaced persons. The government also pointed to Rs 115 billion in allocations from the federal Public Sector Development Programme (PSDP) for provincial projects over the past 15 years, and Rs 481.433 billion spent through the Benazir Income Support Programme (BISP) in KP from FY2016 to FY2025.
Further steps to resolve fiscal matters
In a bid to strengthen NFC governance, officials said the inaugural NFC meeting of the 11th cycle decided to form a dedicated sub-group to make recommendations on merging former Fata shares into the divisible pool. the first meeting is scheduled for December 23, 2025, with KP’s finance minister as the convener, signaling a collaborative effort to resolve outstanding fiscal matters.
The ministry reiterated the Centre’s commitment to equitable resource distribution, fiscal federalism, and sustained support for KP, ensuring that security, displacement, and administrative integration needs are addressed promptly and responsibly.
Table: snapshot of key NFC figures and transfers
| Metric | Value | Notes |
|---|---|---|
| KP share under 7th NFC | 14.62% of provincial share | As per 7th NFC Award |
| Additional war-on-terror allocation | 1% of undivided pool | Granted to KP |
| Recent NFC release to KP | Rs 46.44 billion | Dec 17 disbursement |
| Total NFC transfers to KP (Jul 2010-Nov 2025) | Rs 5.867 trillion | Includes security-related allocations |
| Direct transfers (oil, gas royalties, etc.) | Rs 482.78 billion | Jul 2010-Nov 2025 |
| FATA merger financing | Rs 704 billion | From 2019 onward |
| Support for IDPs | Rs 117 billion | Over the years |
| KP allocations via PSDP | Rs 115 billion | Past 15 years for provincial projects |
| BISP spending in KP | Rs 481.433 billion | FY2016-FY2025 |
Why this matters-and what to watch next
Experts say the NFC framework remains a cornerstone of fiscal federalism in Pakistan, shaping how resources flow to provinces amid security pressures, displacement, and administrative integration. The decision to form a dedicated sub-group for Fata’s merger signals a pragmatic approach to aligning the divisible pool with evolving provincial needs.
For KP, continued, predictable transfers are crucial to sustaining development projects in both traditional districts and merged tribal areas, even as authorities negotiate the terms of future NFC cycles.
Evergreen takeaways
Fiscal clarity and timely disbursements underpin trust between the federal center and provincial governments. As regional dynamics shift, clear rules and consultative processes help anticipate funding for social protection, development, and post-conflict recovery.
What does this mean for KP’s development agenda in the near term? How should Islamabad balance security exigencies with long-term growth plans in the NFC framework?
share your thoughts in the comments below: Do you expect faster NFC reforms or more meetings before a new award is agreed?
Disclaimer: Financial figures reflect official disclosures and are subject to change with budgetary decisions and NFC deliberations.
Core claim: All national Finance Commission (NFC) allocations for the 2025‑26 fiscal year were transferred to Khyber Pakhtunkhwa (KP) on schedule, meeting the 30 June 2025 deadline stipulated in the NFC Award.
Finance Ministry Confirms Timely NFC Transfers to Khyber Pakhtunkhwa
Official statement overview
- Date of release: 20 December 2025, 14:55 PKT
- Source: Ministry of Finance press conference, Islamabad
- Core claim: All National finance Commission (NFC) allocations for the 2025‑26 fiscal year were transferred to Khyber pakhtunkhwa (KP) on schedule, meeting the 30 June 2025 deadline stipulated in the NFC Award.
Key data points from the Finance Ministry
| Parameter | Details |
|---|---|
| Total NFC allocation to KP (2025‑26) | PKR 159 billion |
| Transfer date | 28 May 2025 (bank‑to‑bank) |
| Disbursement method | Central bank settlement via State Bank of Pakistan (SBP) |
| Verification source | SBP transaction ledger,Ministry of Finance audit report (ref MF‑2025‑NFC‑KP) |
| Follow‑up monitoring | Quarterly compliance review by the Planning and Development Division |
Chronology of the transfer process
- NFC award ratification (January 2025) – Provincial Assembly of KP approved the NFC award,confirming the share of national revenues.
- Budget integration (March 2025) – KP’s Finance Department incorporated the NFC share into the provincial budget, aligning expenditure plans for health, education, and infrastructure.
- Transfer execution (28 May 2025) – The Ministry of Finance initiated the electronic funds transfer to the KP Treasury’s SBP account, triggering automatic receipt confirmation.
- Post‑transfer audit (June 2025) – Independent audit by the Office of the Auditor general verified the full amount was credited without deduction.
Rebuttal to funding delay allegations
- Media claims – Several local news outlets reported alleged delays in NFC disbursement affecting ongoing development projects.
- Ministry response – The Finance Ministry’s press release explicitly stated that all transfers were completed before the statutory deadline, and any project‑specific cash‑flow issues stem from internal provincial budgeting cycles, not from central‑government funding.
Impact on provincial projects
- Health sector – PKR 32 billion allocated for the KP Health Infrastructure Program (2025‑26) has been released,enabling the construction of three new district hospitals.
- Education sector – PKR 21 billion earmarked for the KP Basic Education Initiative is fully available, supporting the recruitment of 5,800 teachers.
- Road and transport – PKR 45 billion for the Provincial Road Development Fund is on hand, accelerating the completion of the Swat‑Dir highway upgrade.
Provincial finance mechanisms ensuring fund utilization
- KP treasury Management System (TMS) – Real‑time tracking of NFC funds, with automated alerts for budget line deviations.
- Monthly expenditure reports – Submitted to the Finance Ministry, showcasing fund absorption rates (average 87% as of September 2025).
- Stakeholder oversight committee – Includes representatives from the Provincial Assembly, civil society, and the Planning Commission, meeting quarterly to review NFC fund deployment.
Practical tips for provincial officials handling NFC funds
- Align project timelines with fund release dates – Synchronize procurement cycles to avoid cash‑flow gaps.
- Utilize the TMS dashboard – Monitor fund balances daily to pre‑empt liquidity issues.
- Maintain clear documentation – Keep audited records for each expenditure line to facilitate swift audits.
- Engage early with the Finance Ministry – Proactively address any discrepancies before they attract public scrutiny.
Case study: KP Rural Electrification Project
- Project scope – Installation of 1,200 solar micro‑grids in remote valleys.
- NFC contribution – PKR 12 billion, transferred on 28 may 2025.
- Outcome – 95% of micro‑grids commissioned by October 2025, delivering reliable electricity to over 150,000 households.
- Key success factor – Early coordination between the KP Energy Department and the Ministry’s NFC liaison office ensured the funds were available for the first procurement cycle.
Frequently asked questions (FAQs)
- Q: Were any NFC funds withheld for KP in 2025‑26?
A: No. The Finance Ministry’s audit confirms 100% disbursement of the approved PKR 159 billion share.
- Q: What recourse do provinces have if they suspect a delay?
A: Provinces can file a formal query with the Finance Ministry’s NFC Monitoring Unit, which must respond within 15 working days.
- Q: How does the Finance Ministry verify timely transfers?
A: Through SBP settlement records, cross‑checked with the Ministry’s internal fund‑tracking system (FMS‑2025).
Key takeaways for stakeholders
- The Finance Ministry’s transparent transfer process eliminates speculation about funding delays.
- Provincial authorities must focus on internal budgeting efficiency to maximize the impact of NFC allocations.
- Ongoing audits and public reporting reinforce fiscal accountability and build trust between the federal and provincial governments.
