Islamabad – A meeting between Khyber-Pakhtunkhwa Chief Minister Sohail Afridi and Prime Minister Shehbaz Sharif on Monday, February 2, 2026, has resulted in partial resolution of a funding dispute, though significant disagreements remain. While both sides agreed to release funds for merged districts, a request for an additional Rs15 billion to support temporarily displaced persons (TDPs) remains unresolved.
Funding Disagreements Persist
The K-P government, led by Chief Minister Afridi, is seeking immediate disbursement of funds allocated under the annual development plan and the Accelerated Implementation Programme (AIP) for the province’s merged districts. Finance Adviser to the K-P chief minister, Muzzammil Aslam, met separately with federal Finance Minister Muhammad Aurangzeb and Planning Minister Ahsan Iqbal to press these demands.
Planning Minister Iqbal stated that his ministry has authorized the release of Rs7 billion, directing K-P officials to follow up with the federal finance ministry for immediate disbursement. However, the federal government has not committed to providing the additional Rs15 billion requested by K-P to address the needs of TDPs from Bajaur, Khurram, and Tirah Valley.
Challenges Supporting Displaced Populations
According to Aslam, the K-P government has already spent Rs10 billion on TDPs this fiscal year and faces its own fiscal constraints. The province initially planned to provide Rs265,000 per displaced family to approximately 19,000 households. Further, Rs4.5 billion is being sought for ongoing expenses at the Bakakhel Camp in North Waziristan, which currently houses 2,000 displaced families, and support for the 15,000 families residing with host families.
The K-P government reports incurring Rs19 billion in expenses in the past, with an additional Rs10.4 billion spent this fiscal year due to operations in Bajaur and Tirah Valley, with no corresponding releases from the federal government. The federal government acknowledges ongoing intelligence-based operations – averaging 200 daily nationwide – but denies any large-scale military operations in K-P.
Broader Financial Concerns
Beyond the immediate needs of TDPs, the K-P government is also seeking clearance of Rs426 billion in non-NFC arrears, including Rs85 billion in net hydel profit. The current budget estimate for FY 2025-26 for the merged districts is Rs143 billion, while the federal government has allocated only Rs80 billion, a figure lower than the previous year’s actual expenditure. Iqbal noted that funding for the merged districts has increased from Rs24 billion during the PTI tenure to Rs28 billion annually under the current government.
Both sides have agreed to continue coordination through established channels to address these outstanding issues and ensure that fiscal arrangements support development, service delivery, and stability in the region. The AIP steering committee will be chaired by K-P Chief Minister Afridi, and the K-P government has been asked to convene a meeting to approve new projects for the fourth quarter.
Frequently Asked Questions
What is the primary point of contention between the federal and K-P governments?
The primary disagreement centers on the federal government’s commitment to provide an additional Rs15 billion to the K-P government to support temporarily displaced persons (TDPs) from Bajaur, Khurram, and Tirah Valley.
What is the Accelerated Implementation Programme (AIP)?
The AIP is a program for the development of merged districts in K-P. Both the federal and provincial governments will have joint ownership of the AIP, with the steering committee chaired by the K-P Chief Minister.
How much funding has the federal government already released for the merged districts?
Planning Minister Ahsan Iqbal stated that his ministry has authorized the release of Rs7 billion, and that Rs16.8 billion has already been disbursed for the first two quarters of the annual development plan.
As these negotiations continue, will the federal government prioritize the immediate needs of displaced populations in Khyber-Pakhtunkhwa, or will fiscal constraints dictate a more limited response?
