KP govt rejects Rs6.4bn cut in federal financial transfers

• Finance Ministry proposed direct deduction: Sohail Afridi.
• Says KP govt did not sign an MoU on share deduction.
• Vows KP govt won’t compromise on constitutional right.
  

PESHAWAR: The Khyber Pakhtunkhwa government has refused to accept an Rs6.4 billion deduction from its federal financial transfers proposed by the Centre.

In a statement, Chief Minister Sohail Afridi said the federal government had sought an additional amount from Khyber Pakhtunkhwa before the budget, adding that releasing the provision had been made conditional on a meeting with PTI founder Imran Khan and his approval.

He said his provincial government did not sign a memorandum of understanding regarding the additional amount as he was not granted permission to meet the PTI founder.

He said that if the Federal Board of Revenue (FBR) achieved its Rs15,260 billion target, the province’s share would amount to Rs175 billion.

Ahead of the passage of Budget 2026-27, Finance Minister Muhammad Aurangzeb said the provinces had provided a grant to the federal government for defence requirements and to create a buffer against the second and third-order impacts of the ongoing Gulf region conflict.

“This arrangement with the provinces has been struck for three years, and it has nothing to do with the National Finance Commission,” he said at his post-budget press conference on June 13.

CM Afridi said another condition was that the merged districts be given their rightful share in the 11th NFC. He said the federal government accepted this condition and incorporated it into the proceedings of the National Economic Council.

It was also decided that if the merged districts did not receive their share within six months, a summary would be prepared and an ordinance issued under the 7th NFC. He added that the additional federal grant was not included in KP’s provincial budget for 2026-27.

The chief minister said the Ministry of Finance proposed on August 5 that Rs6.4 billion owed to Khyber Pakhtunkhwa be deducted directly. “The Khyber Pakhtunkhwa government neither approved nor agreed to the proposed Rs6.4 billion deduction,” he said. The provincial Finance Department subsequently made its opposition clear in a letter dated August 13.

Afridi said the issue was not merely a political disagreement but concerned the province’s constitutional and financial rights.

He said Finance Adviser Muzammil Aslam immediately met relevant officials of the Accountant General Khyber Pakhtunkhwa, following which written instructions were issued against making any deduction without the province’s consent.

The Accountant General Pakistan Revenues had also been instructed not to record or implement any transaction without the provincial government’s explicit consent.

He said Article 164 of the Constitution did not give the federal government the authority to unilaterally deduct amounts owed to the province, and that any deduction required a clear constitutional or legal basis as well as provincial consent.

The chief minister said the KP government had already filed a petition before the Federal Constitutional Court to secure its constitutional right under the NFC and would pursue every legal and constitutional avenue to protect its financial share. “The provincial government will not compromise on its NFC rights,” he said.