KP Govt Rejects Rs6.4bn Reduction in Federal Financial Transfers
CM Afridi says provision was conditional on meeting with incarcerated PTI founder Imran Khan
Finance Ministry proposed direct deduction, says Sohail Afridi
- KP govt did not sign MoU on deduction, CM says
- Province will not compromise on its constitutional rights
PESHAWAR: The Khyber Pakhtunkhwa (KP) government has rejected a proposal by the federal government to directly deduct Rs6.4 billion from the province’s federal financial transfers, terming the move a violation of its constitutional and financial rights.
Chief Minister Sohail Afridi said the federal government had sought an additional amount from KP before the federal budget, but its release was made conditional on a meeting with PTI founder Imran Khan and obtaining his approval.
According to the chief minister, the provincial government did not sign any memorandum of understanding (MoU) concerning the proposed amount because he was not allowed to meet the PTI founder.
Afridi said that if the Federal Board of Revenue (FBR) achieved its Rs15,260 billion revenue target, KP’s share would amount to around Rs175 billion.
Before the passage of the federal Budget 2026-27, Finance Minister Muhammad Aurangzeb had said that the provinces had agreed to provide a grant to the federal government to meet defence requirements and create a buffer against the second- and third-order effects 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,” Aurangzeb said at a post-budget press conference on June 13.
Afridi said another condition attached to the arrangement was that the merged districts of KP should receive their due share under the 11th NFC. He said the federal government accepted the condition and incorporated it into the proceedings of the National Economic Council.
He added that it had also been agreed 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.
However, the chief minister said the additional federal grant was not included in KP’s provincial budget for 2026-27.
He said the Ministry of Finance proposed on August 5 that Rs6.4 billion owed to KP be deducted directly from the province’s federal transfers.
“The Khyber Pakhtunkhwa government neither approved nor agreed to the proposed Rs6.4 billion deduction,” Afridi said, adding that the provincial Finance Department formally conveyed its opposition through a letter dated August 13.
Afridi said the matter was not simply a political dispute but involved the province’s constitutional and financial rights.
He said Finance Adviser Muzammil Aslam immediately met relevant officials of the Accountant General Khyber Pakhtunkhwa, after which written instructions were issued against making any deduction without the provincial government’s consent.
The Accountant General Pakistan Revenues was also instructed not to record or implement any transaction involving the proposed deduction without explicit approval from the provincial government, he added.
The chief minister argued that Article 164 of the Constitution did not empower the federal government to unilaterally deduct amounts owed to the province. Any such deduction, he maintained, must have a clear constitutional or legal basis and the consent of the provincial government.
Afridi said the KP government had already filed a petition before the Federal Constitutional Court to protect its constitutional rights under the NFC and would pursue all available legal and constitutional avenues to safeguard its financial share.
“The provincial government will not compromise on its NFC rights,” he said.
