KP Rejects Proposed Rs6.4 Billion Deduction From Federal Transfers
- Khyber Pakhtunkhwa government says it never approved or agreed to the proposed Rs6.4 billion deduction.
- Chief Minister Sohail Afridi says the province did not sign the proposed arrangement for providing additional funds to the Centre.
- KP maintains that any deduction from its federal transfers requires a clear constitutional or legal basis and provincial consent.
- The dispute follows earlier disagreements between the Centre and KP over additional fiscal contributions and the province’s NFC-related claims.
The Khyber Pakhtunkhwa government has rejected a proposed Rs6.4 billion deduction from its federal financial transfers, saying it neither approved nor agreed to the adjustment and will defend the province’s financial rights through constitutional and legal means.
Chief Minister Sohail Afridi said the federal government had sought an additional contribution from Khyber Pakhtunkhwa ahead of the 2026-27 budget. He said the province had linked any such arrangement to a meeting with PTI founder Imran Khan and to addressing the financial share of the merged districts.
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According to Afridi, the province did not sign the proposed memorandum of understanding after a meeting with Imran Khan was not facilitated. As a result, he said, the additional amount sought by the Centre was also not incorporated into KP’s 2026-27 provincial budget.
The chief minister said the Ministry of Finance proposed on August 5 that Rs6.4 billion be directly deducted from funds payable to Khyber Pakhtunkhwa. He added that the provincial Finance Department formally communicated its disagreement with the proposed deduction in a letter dated August 13.
Afridi argued that the issue was not simply a political disagreement but concerned the province’s constitutional and financial rights. He maintained that the federal government could not make a unilateral deduction on the basis of an arrangement that had never been approved by the provincial government.
The latest dispute follows disagreements that emerged during preparations for the 2026-27 federal and provincial budgets. In June, KP officials publicly said the province would not provide additional funds to the Centre without approval from Imran Khan and argued that provincial funds could not be withheld unilaterally.
The broader disagreement is linked to the distribution of federal revenues and fiscal responsibilities between the Centre and provinces. The federal government has set an FBR tax collection target of around Rs15.26 trillion for 2026-27, while federal budget documents provide for substantial transfers to provinces under the existing fiscal framework.
KP has also repeatedly raised concerns over what it considers outstanding constitutional payments, including NFC-related transfers and other federal liabilities. The provincial government’s own 2026-27 fiscal framework projects federal transfers as its largest source of revenue, highlighting the importance of such payments to the province’s finances.
Afridi said his government would not compromise on Khyber Pakhtunkhwa’s rights under the National Finance Commission framework and would use all available legal and constitutional avenues if any amount was deducted without provincial consent.
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