Islamabad, December 20, 2025: The Ministry of Finance on Saturday rejected claims that the federal government owes outstanding payments to provinces under the National Finance Commission (NFC), stating that provincial shares are released every 15 days and that there are no pending liabilities.
The clarification came after Khyber Pakhtunkhwa (KP) Chief Minister Sohail Afridi alleged that the Centre had 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 on a fortnightly basis, and there are no outstanding liabilities in this regard,” the finance ministry said in an official statement.
The ministry explained that under the 7th NFC Award, KP’s share was fixed at 14.62 per cent of the provincial share in the divisible pool, in addition to an extra one per cent from the undivided divisible pool in recognition of the extraordinary burden borne by the province during the war on terror.
It noted that although the 7th NFC Award was originally designed for a five-year period, the lack of consensus on subsequent NFC Awards — the 8th, 9th and 10th — had necessitated the continued implementation of the existing framework. As a result, KP continues to receive its full share, including the additional allocation for the war on terror, under the 7th NFC Award.
The ministry said Rs46.44 billion was released to the KP government on December 17, underscoring the federal government’s commitment to timely disbursement of funds.
According to official figures, the federal government has transferred Rs5.86 trillion to KP as its share of the divisible pool from July 2010 to November 2025, along with Rs705 billion specifically allocated on account of the war on terror. In addition, Rs482.78 billion has been released to the province in the form of oil and gas royalties, gas development surcharge, excise duty on natural gas, and other related heads.
The finance ministry further stated that following the merger of the former Federally Administered Tribal Areas (FATA) with KP, the federal government has been financing the expenditures of the newly merged districts from its own NFC share. Since 2019, Rs704 billion has been transferred to the KP government for these districts.
It added that due to the absence of a revised NFC formula after the 7th Award, the Centre has continued to allocate funds for the ex-FATA regions from its own share. An additional Rs117.16 billion has also been provided to KP over the years to support Internally Displaced Persons (IDPs).
The statement said the funds transferred to KP include Rs115 billion for provincial welfare and development through the federal Public Sector Development Programme (PSDP) over the past 15 years, as well as Rs481.43 billion disbursed under the Benazir Income Support Programme (BISP) from fiscal year 2016 to fiscal year 2025.
Referring to developments on the NFC front, the finance ministry said that during the inaugural meeting of the 11th NFC held on December 4, it was decided to constitute a dedicated sub-group to make recommendations regarding the merger of former FATA, now known as the Newly Merged Districts, and their share in the divisible pool.
“The first meeting of the sub-group, convened at the request of the KP government, is scheduled to be held on December 23 under the chairmanship of the KP finance minister,” the statement added.
