The Khyber Pakhtunkhwa government is expected to contribute Rs. 180 billion to the federal government as part of a broader provincial effort to help Islamabad meet its fiscal targets for Budget 2026-27.
According to sources, tensions between the provincial and federal governments have eased in recent weeks, with both sides increasingly favoring cooperation on financial and budgetary matters.
Recent discussions between Faisal Karim Kundi and Chief Minister Muhammad Sohail Afridi are said to have improved coordination between the province and the federation.
During a late-night meeting at the Civil Secretariat in Peshawar, officials reviewed the federal government’s requirement of more than Rs. 1.2 trillion in provincial contributions to support national budget objectives and fiscal commitments.
Sources said participants agreed that KP would provide its share of the required amount, provided other provinces also contribute proportionately.
As a result, the province has indicated its willingness to transfer approximately Rs. 180 billion to the federal government.
The matter is expected to be formally discussed at a meeting of the National Economic Council (NEC), where KP’s financial position will be represented by Finance Adviser Muzammil Aslam.
The development follows recent consultations between Chief Minister Sohail Afridi and Federal Minister for Planning Ahsan Iqbal regarding NEC matters and provincial financial rights.
The discussions come shortly after Punjab reportedly indicated its readiness to provide a Rs. 570 billion fiscal concession to help the federal government reduce its budget deficit and meet commitments linked to the International Monetary Fund program.
Federal authorities are relying on provincial budget surpluses and financial support to achieve key fiscal objectives in Budget 2026-27, making provincial cooperation a critical component of the government’s economic strategy.
