ISLAMABAD, DEC 20: The finance ministry on Saturday clarified that the federal government had no outstanding liabilities under the National Finance Commission (NFC) to the provinces, stating that provincial NFC shares were released on a fortnightly basis.
The clarification comes after assertions by Khyber Pakhtunkhwa (KP) Chief Minister Sohail Afridi that the Centre has failed to pay Rs1,350 billion to the province under the NFC Award over the past seven years.
“The federal government disburses funds to the provinces under the NFC every 15 days, and there are no outstanding liabilities in this regard,” the ministry said in a statement.
The finance ministry noted that KP’s share was determined at 14.62% of the provincial share in the divisible pool under the 7th NFC Award, along with 1% of the undivided divisible pool “in recognition of the extraordinary burden borne by the province during the war on terror”.
“Although the 7th NFC Award was originally envisaged for a five-year period, the absence of consensus on subsequent NFC Awards (8th, 9th, and 10th) necessitated the continued implementation of the 7th NFC Award framework,” it stated.
Due to the absence of the subsequent awards, KP continues to receive its share, including the additional allocation for the war on terror under the 7th NFC Award, the ministry added.
An amount of Rs46.44 billion was released to the KP government on December 17, the ministry said, adding that the release of funds underscored the federal government’s adherence to timely disbursement commitments.
The finance ministry noted that the federal government has transferred Rs5.86 trillion to the KP government as its share of the divisible pool, and Rs705 billion on account of the war on terror from July 2010 to November 2025.
Additionally, it said, the government has released Rs482.78 billion in royalties on oil and natural gas, gas development surcharge, excise duty on natural gas, and other related heads.
Centre financing merged districts’ expenditures
According to the finance ministry, the federal government had been financing the expenditures of the newly merged districts from its own NFC share following the merger of former FATA into KP.
Since 2019, Rs704 billion have been transferred to the KP government for the merged districts, it said.
The finance ministry noted that the federal government had allocated funds for the ex-FATA from its share due to the absence of a revised NFC formula after the 7th NFC Award.
An additional Rs117.16 billion has been provided to KP over the years to support Internally Displaced Persons (IDPs), the ministry stated.
The funds transferred to KP include Rs115 billion for provincial welfare and development over the past 15 years from the federal PSDP, and Rs481.43 billion through the Benazir Income Support Programme (BISP) from fiscal year 2016 to fiscal year 2025.
The ministry also noted the decisions made during the inaugural meeting of the 11th NFC on December 4.
“It was decided to constitute a dedicated Sub-Group to make recommendations on the merger of former FATA/Newly Merged Districts and their share in the divisible pool,” it stated.
The first meeting of the sub-group, requested by the KP government, is scheduled for December 23 under the chair of the KP finance minister, the ministry added.
