ISLAMABAD: The presentation of Pakistan’s federal budget for 2026-27 has been thrown into uncertainty after the meeting of the National Economic Council (NEC) was postponed for the third consecutive time amid unresolved disputes between the federal government and provinces over fiscal resource sharing.
Originally scheduled for June 8, the NEC meeting was deferred at the last moment as negotiations continued over the federal government’s proposal to secure more than Rs1 trillion in additional funding for strategic national requirements. The proposal involves freezing provincial shares under the National Finance Commission (NFC) Award at the current fiscal year’s level, a move strongly opposed by provincial governments.
The delay has cast doubt on the government’s plan to present the federal budget in parliament on June 10. The Ministry of Finance has yet to announce a revised schedule for both the Economic Survey of Pakistan and the budget presentation.
Speaking to journalists after a meeting with a federal delegation led by Planning Minister Ahsan Iqbal, Khyber Pakhtunkhwa Chief Minister’s Adviser on Finance Muzzammil Aslam confirmed that provinces had been informed that their NFC allocations would not increase next year. Any funds received beyond the current year’s share would have to be returned to the federal government.
Aslam said provinces strongly objected to the proposal, arguing that it would create budget deficits and severely constrain their ability to manage governance, development projects, and public services. He noted that federal officials had suggested provinces could offset the impact by freezing salaries and limiting development expenditures.
The federal government’s request comes in addition to the Rs1.95 trillion cash surplus already committed by provinces under the IMF-backed National Fiscal Pact.
Describing the situation as unprecedented, Aslam said he had not witnessed such a complex budgetary deadlock in more than two decades of observing and participating in Pakistan’s fiscal processes. He warned that even the rescheduled NEC meeting remained uncertain and that no clear path to consensus had emerged.
He further cautioned that implementing the proposal could conflict with commitments made to the International Monetary Fund (IMF), particularly regarding provincial surplus targets.
While acknowledging that the additional funds were intended for strategic national purposes and were justified in principle, Aslam said larger provinces, particularly Punjab and Sindh, would need to demonstrate flexibility. According to him, Punjab’s contribution could amount to around Rs700 billion and Sindh’s approximately Rs500 billion, while Khyber Pakhtunkhwa’s share would range between Rs170 billion and Rs180 billion.
Aslam said the matter had evolved beyond technical fiscal discussions into a political issue, requiring consultation with former Prime Minister Imran Khan. He called for urgent access for KP Chief Minister Sohail Afridi and himself to meet Khan at Adiala Jail before any final decisions are taken.
Meanwhile, the Chief Minister’s Office stated that discussions with the federal delegation covered a broad range of issues, including the NEC meeting, fiscal rights of provinces, funding for merged districts, energy concerns, wheat supply, hydropower projects, and consultation with political leadership on key economic matters.
Chief Minister Afridi voiced concerns over what he described as unequal treatment of Khyber Pakhtunkhwa in development financing and fiscal allocations. He highlighted reductions in funding for the merged districts and claimed that the NFC share for these areas had remained withheld for eight years, negatively affecting development and public welfare.
He also raised concerns over persistent gas shortages in the province despite KP producing more than 500 million cubic feet of natural gas per day, significantly exceeding local consumption requirements.
The chief minister further pointed to delays in operationalising completed infrastructure projects, including a dam in Swat and the Peshawar Bus Terminal, due to pending federal approvals and clearances.
Planning Minister Ahsan Iqbal assured the provincial leadership that the concerns raised would be presented before the prime minister and relevant federal forums. He also pledged that the required no-objection certificate for the Peshawar Bus Terminal would be facilitated within 24 hours.
With key fiscal disagreements still unresolved, uncertainty continues to surround the timing of both the NEC meeting and the federal budget announcement, raising concerns about delays in Pakistan’s annual budget process.
Story by Khaleeq Kiani
