The chief minister said the federal Ministry of Finance had proposed the deduction on August 5, but the provincial government neither approved nor agreed to the proposed arrangement.

CM Afridi said the federal government had sought additional funds from Khyber Pakhtunkhwa, as it had from other provinces, before the federal budget. He said he had made the provision of the additional funds conditional on a meeting with PTI founder Imran Khan, who is incarcerated at Adiala Jail, and obtaining his approval.

He added that granting the merged districts their constitutional and rightful share under the 11th National Finance Commission (NFC) was another condition set by the provincial government.

According to CM Afridi, the federal government had agreed to provide the merged districts their due share within six months and incorporated the condition into the proceedings of the National Economic Council (NEC).

He said the provincial government had decided to pursue a summary and ordinance under the 7th NFC if the merged districts did not receive their rightful share within the stipulated six-month period.

Rs6.4bn deduction rejected

CM Afridi said the provincial government did not approve or sign the memorandum of understanding (MoU) concerning the additional funds because a meeting with the PTI founder was not facilitated.

He said the Ministry of Finance proposed deducting Rs6.4 billion from the federal transfers due to Khyber Pakhtunkhwa for July.

The provincial Finance Department formally conveyed its disagreement with the proposed deduction in a letter dated August 13, he added.

CM Afridi said no funds had been allocated for the proposed arrangement in the Khyber Pakhtunkhwa budget for fiscal year 2026-27.

He said that if the Federal Board of Revenue (FBR) achieved its Rs15.26 trillion revenue target, Khyber Pakhtunkhwa’s share would have been around Rs175 billion.

KP vows to defend its share

The chief minister described the dispute as a matter of the province’s constitutional and financial rights rather than merely a political disagreement.

“Khyber Pakhtunkhwa will not accept this unconstitutional move,” CM Afridi said, adding that the provincial government would use every legal, constitutional and institutional avenue to protect its rights.

He said the province would defend every rupee of its due financial share.