KP rejects Centre’s proposal to deduct Rs6.4bn from federal transfers

The Khyber Pakhtunkhwa (KP) government has declined a federal proposal for deducting Rs6.4 billion from provincial transfers. This proposal, announced on August 5 by the Finance Ministry, was communicated to the Accountant General of Pakistan Revenues (AGPR) Peshawar office. The KP Finance Department responded, stating that the proposed deduction had not been approved by the provincial cabinet or the provincial government, nor was any budgetary provision made for it in the provincial budget for FY 2026-27.

The KP government cited Article 164 of the Constitution, which does not permit unilateral deductions from funds payable to a province. They emphasized that any such deduction would require express constitutional or statutory basis. The matter was further discussed in a meeting chaired by the advisor to the chief minister on finance, where it was decided that no action would be taken without the KP government's concurrence.

KP Chief Minister Sohail Afridi mentioned that the federal government had demanded additional funds prior to the budget, but the KP government had conditions for this, including approval from Imran Khan and a meeting regarding the merged districts' constitutional share. Afridi stated that the KP government had neither approved nor signed any MoU with the federal government regarding the additional amount, nor was it included in the provincial budget for FY2026-27.

The KP government has also filed a petition with the Federal Constitutional Court for enforcing its constitutional rights under the National Finance Commission. The CM reiterated that the provincial government will not compromise on its fiscal rights.