A sub-group of the National Finance Commission (NFC) met on Tuesday to begin crafting recommendations for the next NFC award, focusing on fiscal issues arising from the merger of former FATA, now the Newly Merged Districts (NMDs), into Khyber Pakhtunkhwa (KP), according to a news report.
The meeting, convened at the request of the KP government, was chaired by KP Chief Minister Sohail Afridi and attended by provincial secretaries, the federal finance secretary, and NFC members.
The sub-group aims to expedite consensus on unresolved fiscal matters, with the goal of finalizing its recommendations for the NFC by mid-January 2026.
During the meeting, the KP government reiterated its position that the existing NFC award should be updated to reflect constitutional changes following the merger of former FATA with KP. KP proposed that the merged districts be treated as a separate component in future NFC awards, with their share in the federal divisible pool calculated independently based on population, poverty, and other development indicators.
The province emphasized that this would align federal resource distribution with the Ten-Year Development Plan for the integration of the former FATA.
KP also called for an upward revision of its share in the divisible pool, factoring in the population, poverty levels, and socio-economic indicators of the merged districts. Additionally, the province demanded compensation for the period from 2019-20 to 2025-26, during which the financial share of the merged districts was not fully included in NFC allocations.
As part of the discussions, KP proposed the creation of a special 10-year grant from the federal divisible pool to address “historical development deficits” in the merged districts. The grant is intended to bring the region up to the same development standards as the rest of KP and the country.
The sub-group is expected to continue discussions in future meetings as it works towards achieving consensus on these fiscal matters.