Federal government reassures Khyber Pakhtunkhwa of support on NFC-linked fund releases and merged districts financing after high-level talks in Islamabad.
The federal government has assured Khyber Pakhtunkhwa (KP) that it will support the province on pending National Finance Commission (NFC) related releases and other key fiscal matters, including funding for the merged districts. The commitment came during a meeting at the Finance Division in Islamabad, where both sides reviewed financial pressures and agreed to strengthen coordination.
Finance Minister Senator Muhammad Aurangzeb met KP Chief Minister’s Advisor on Finance Muzamil Aslam to discuss how to speed up the release of funds under agreed frameworks. Officials said the discussion centred on development allocations for the merged districts, support for temporarily displaced persons and broader questions around KP’s fiscal entitlements under the NFC arrangements.
KP Flags Funding Needs in Merged Districts
During the meeting, the KP delegation highlighted the operational and development pressures facing the merged districts, which have been through security operations, displacement and a lengthy transition into the provincial system. Officials stressed that predictable and timely release of funds is essential to keep ongoing projects on track and to respond to urgent needs in health, education, infrastructure and social protection.
They pointed out that the merged areas require additional resources for rehabilitation, basic services and local governance support, given the scale of damage and backlog of needs. Without steady funding flows, projects in these districts risk delays, cost overruns or even suspension, which could undermine public confidence and slow down the integration process.
The delegation also raised concerns regarding pending obligations linked to families displaced by conflict and operations. They argued that commitments made for assistance and rehabilitation must be honoured in full and that stronger inter-governmental coordination is needed to clear bottlenecks and resolve outstanding claims.
Federal Government Reaffirms Commitment to Cooperative Federalism
Finance Minister Muhammad Aurangzeb responded by reaffirming the federal government’s commitment to cooperative federalism and constructive engagement with all provinces. He acknowledged the unique development and security challenges that KP faces, especially in the merged districts, and said the Centre remains mindful of those realities when planning fund releases.
Aurangzeb assured the KP team that their rightful claims under the NFC framework and other agreed heads would be facilitated in line with the rules, procedures and mutual understandings in place. He emphasised that the goal is not only to clear pending amounts but also to improve predictability so the province can plan its budget and development portfolio with greater confidence.
The minister underlined that effective coordination between federal and provincial finance teams is critical for timely disbursements. He also highlighted the need to keep lines of communication open at both political and technical levels so that potential disputes can be addressed early rather than allowed to build up over time.
Focus on NFC Entitlements, Technical Talks and Reconciliation
Officials said the meeting also took stock of ongoing consultations on NFC-related matters. These talks include technical discussions and subgroup meetings aimed at clarifying data, sharing assumptions and building consensus on how resources should be distributed to reflect both constitutional principles and current economic realities.
Aurangzeb noted that timely reconciliation of accounts between the Centre and KP is a key factor in ensuring smooth fund flows. When figures on releases, expenditures and adjustments are updated regularly, it becomes easier to identify gaps, settle differences and plan future disbursements without unnecessary delays.
For KP, the NFC process is central to its fiscal space, as the province relies heavily on federal transfers to fund core services and reforms. The province has therefore pushed for more transparent and predictable mechanisms that fully reflect its entitlements, including additional needs arising from the merged districts.
Next Steps: Closer Coordination to Support Development and Stability
Both sides agreed that closer coordination through technical and institutional channels is essential to ensure that fiscal arrangements actually support development on the ground. This includes making sure that funds for merged districts, displaced persons and critical services reach implementing agencies in time for them to deliver results.
KP officials stressed that strong and steady financial backing from the Centre can help sustain security gains, expand service delivery and create more economic opportunities in vulnerable areas. Federal counterparts, in turn, called for regular updates on project execution and outcomes so that future support can be aligned with real needs and performance.
The meeting ended with an understanding to maintain regular engagement and to work jointly on resolving priority fiscal issues in the national interest. Both sides signalled that the coming months will focus on turning commitments into efficient disbursements, with the shared objective of supporting stability and inclusive development across Khyber Pakhtunkhwa and its merged districts.
