The preparation of Pakistan’s Federal Budget 2026–27 has entered its final stages; however, serious disagreements have emerged between the federal government and provinces over the NFC divisible pool formula. Due to this deadlock, there is a possibility of further delay in the presentation of the upcoming budget.
The federal government has demanded additional financial resources worth approximately Rs. 1,200 billion from the provinces, while provincial governments are unwilling to accept any reduction in their constitutional share. Negotiations between both sides are ongoing to resolve the issue, and if a consensus is reached, the federal budget is proposed to be presented on June 12.
Under the current NFC Award, provinces are entitled to around Rs. 9,400 billion, while the federal government has proposed transferring a total of Rs. 8,200 billion to provinces, creating a significant gap in resource allocation. The federal government has asked provinces to contribute from their shares as follows: Punjab Rs. 650 billion, Sindh Rs. 300 billion, Khyber Pakhtunkhwa Rs. 180 billion, and Balochistan Rs. 110 billion.
Despite these differences, progress has been made on increasing Sindh’s development budget from Rs. 50 billion to Rs. 62 billion. The federal government maintains that the proposed adjustments are necessary for national defense, security, and providing relief to the public amid rising inflation.
Any changes to the NFC Award formula require formal legislation or the unanimous consent and signatures of all provinces, as mandated by constitutional provisions.