ISLAMABAD: In a dramatic escalation of inter-provincial tensions, the Government of Khyber Pakhtunkhwa (KP) has walked out of the National Finance Commission (NFC) deliberations, declaring that it “does not wish to remain party to an unconstitutional formula detrimental to the region,” particularly the newly merged districts.
The move came during a meeting of Subgroup-VII of the 11th NFC, convened to deliberate on the share of erstwhile FATA -- now merged with KP -- in the federal divisible pool. KP, which was chairing the session, withdrew from the proceedings, accusing other provinces of denying constitutionally mandated adjustments following the 25th Constitutional Amendment.
In a formal communication to Federal Finance Minister Muhammad Aurangzeb, KP Finance Minister Muzammil Aslam said the continued delay in recognising the share of merged districts was a violation of constitutional principles and reflected “narrow provincialism”.
The province argued that despite the merger of FATA with KP, the NFC formula has not been updated to reflect the increased population and geographical realities. It maintained that eight annual extensions of the 7th NFC Award under Article 160(6) have effectively excluded the merged districts, undermining equitable resource distribution.
KP also raised alarm over what it described as “unlawful disbursements,” claiming that funds amounting to approximately Rs964 billion, meant for the development, stabilization and security of the merged districts, had been diverted elsewhere due to the failure to revise the formula in a timely manner.
The letter stressed that KP has borne a disproportionate burden in terms of security challenges, particularly along the western border, and warned that continued neglect of the merged districts could have serious implications for national stability and cohesion.
While reaffirming its commitment to the NFC process and the principles of federalism, KP made it clear that it could not support a mechanism that, in its view, violates constitutional requirements and puts to disadvantage one of the country’s most vulnerable regions. As an interim solution, the province suggested that the federal government consider revising the resource distribution formula or introducing discretionary grants for provinces until a consensus NFC Award is finalised. KP has urged the federal government to immediately convene a meeting of the NFC with a focused agenda to update the formula, remove unconstitutional elements and align resource distribution with the requirements of 25th Amendment. The province expressed its readiness to resume participation in the NFC process once the issue is addressed in accordance with constitutional provisions, emphasising that a fair and updated award is essential for fiscal stability, development and national unity.
