Islamabad : The Ministry of Finance on Saturday said it reaffirms the federal government’s continued commitment to ensuring timely, transparent, and sustained financial transfers to the Province of Khyber Pakhtunkhwa (KP) in accordance with the National Finance Commission (NFC) Award and beyond, reflecting the Federation’s resolve to support provincial development, fiscal stability, and post-conflict rehabilitation.
Under the 7th NFC Award, Khyber Pakhtunkhwa’s share was determined at 14.62 percent of the provincial share in the divisible pool. In recognition of the extraordinary burden borne by the province during the War on Terror (WoT), an additional 1 percent of the undivided divisible pool was allocated exclusively to KP. 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. Accordingly, KP continues to receive its due share, including the additional allocation for WoT.
The Federal Government releases provincial NFC shares on a fortnightly basis, and no outstanding liabilities exist in this regard. Most recently, an amount of Rs. 46.44 billion was released to the Government of Khyber Pakhtunkhwa (GoKP) on 17 December 2025, underscoring the Federal Government’s adherence to timely disbursement commitments.
Transfers under the 7th NFC Award
From July 2010 to November 2025, an amount of Rs. 5,867 billion has been transferred to GoKP as its share of the divisible pool.
During the same period, Rs. 705 billion has been provided to KP on account of the War on Terror, reflecting federal recognition of the province’s sacrifices and responsibilities.
Straight Transfers
In addition to NFC transfers, the Federal Government has ensured the uninterrupted flow of straight transfers to KP. From July 2010 to November 2025, an amount of Rs. 482.78 billion has been transferred on account of royalties on oil and natural gas, gas development surcharge, excise duty on natural gas, and other related heads.
Additional Federal Support Beyond NFC
Recognizing KP’s unique fiscal and administrative challenges, the Federal Government has extended substantial financial support beyond the NFC framework:
Newly Merged Districts (NMDs):
Following the merger of former FATA into KP after the 7th NFC Award, and in the absence of a revised NFC formula, the Federal Government has been financing the expenditures of the Newly Merged Districts from its own NFC share.
Since 2019, an amount of Rs. 704 billion has been transferred to GoKP for NMDs.
Internally Displaced Persons (IDPs):
An additional Rs. 117.166 billion has been provided to KP over the years to support Internally Displaced Persons.
Devolved Expenditure and Federal Programs:
Despite constitutional devolution, the Federal Government continues to invest in provincial welfare and development:
Rs. 115 billion has been allocated to KP over the past fifteen years from the Federal PSDP for development projects of a provincial nature.
Through the Benazir Income Support Programme (BISP), an amount of Rs. 481.433 billion has been spent in Khyber Pakhtunkhwa from FY 2016 to FY 2025 on Unconditional and Conditional Cash Transfers, providing critical social protection to vulnerable households.
Progress on the 11th NFC Award
The Federal Government remains committed to strengthening the NFC framework through inclusive consultation. The 11th NFC was constituted by the President of Pakistan on 22 August 2025 and held its inaugural meeting on 4 December 2025. During the meeting, 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.
At the request of the Government of Khyber Pakhtunkhwa, the first meeting of this Sub-Group is scheduled for 23 December 2025, with the Finance Minister, Khyber Pakhtunkhwa, serving as the designated convener, demonstrating a collaborative and transparent approach toward resolving outstanding fiscal matters.
The Ministry of Finance reiterates that the Federal Government remains fully committed to equitable resource distribution, fiscal federalism, and sustained support for Khyber Pakhtunkhwa, ensuring that provincial needs, particularly those arising from security challenges, displacement, and administrative integration, are addressed in a timely and responsible manner.
