The Finance Advisor of Khyber Pakhtunkhwa (KP) has written to the federal government, raising alarm over the province’s worsening fiscal situation due to delayed federal fund releases.
The letter highlighted that reductions in federal transfers have put severe financial pressure on KP, putting the Rs157 billion surplus target for fiscal year 2025-26 at risk. During the first six months of FY 2025-26, the federal government released significantly fewer funds than allocated, disrupting provincial fiscal management.
For the merged districts, Rs292 billion had been allocated, but only Rs56 billion was released in six months, causing major development projects to suffer from fund shortages.
Similarly, street transfer allocations fell drastically, with only Rs19 billion released out of the planned Rs115 billion. National Finance Commission (NFC) share allocations were Rs76 billion short, and net hydel profits of Rs106 billion were underfunded, with only Rs18 billion received.
The letter also noted additional expenditures that increased provincial financial stress, including Rs28 billion on flood relief and rehabilitation and Rs7 billion for independent power producers (IPPs).
The ongoing shortfall in federal transfers has delayed development activities across the province. Despite limited resources, the KP government independently released Rs46 billion to sustain projects.
The provincial government urged the federal authorities to ensure timely and full disbursement of funds to prevent further disruption of development initiatives.
