- Centre has decided to use receipts on water resources.
- Provinces agreed to provide Rs1,035bn to Centre in FY27.
- Arrangement to continue for medium term: finance czar.
ISLAMABAD: The federal government has, for the first time in the country’s history, deducted Rs35 billion from the grant receipts of all four provinces under Article 164 of the Constitution, out of the total projected earmarked amount of Rs1.035 trillion for the financial year 2026-27.
“The Centre has deducted Rs34.839 billion as grant receipts from the provinces under Article 164 as Non-Tax Revenue (NTR) during the first two months of the current financial year 2026-27,” The News reported, citing top official sources in the Finance Division.
The Centre and the four provinces had agreed ahead of the budget 2026-27 announcement that the provinces would provide Rs1,035 billion as grants to the federal government from their National Finance Commission (NFC) share to help meet its obligations under the $7 billion IMF programme for FY27.
However, Minister for Finance Muhammad Aurangzeb had stated that this arrangement of sharing grants with the Centre would continue for the medium term, but he did not specify the exact timeframe in the absence of a new NFC Award.
The federal government has decided in principle to utilise these resources collected in the shape of non-tax revenue on water resources after the first instalment had been approved by the Economic Coordination Committee as a Technical Supplementary Grant for utilisation on funds for the Bhasha and Dasu hydropower projects and K-IV in Karachi.
These resources will be diverted towards water resources in phases, as the federal government will continue deduction on the basis of revenue collection of the FBR and deduction of the Centre in line with the agreed formula with the provinces under Article 164 of the 1973 Constitution.
On the other hand, all the federal ministries, divisions and attached departments have so far utilised Rs74.655 billion on development projects out of the total allocated amount of Rs682.485 billion for the Public Sector Development Programme (PSDP) for FY27.
Out of the total allocated amount of Rs103.086 billion for water resource development, the federal government authorised Rs90 billion, but utilisation of funds stood at Rs18.726 billion in the first four months (July-October) of the current fiscal year.
The utilisation of funds for water resource development remained the second largest head for utilisation of development funds. The first head of expenditure was the provinces and special areas, where the fund utilisation stood at Rs23.8 billion.
The Cabinet Division authorised Rs64 billion for the Parliamentarians’ Sustainable Development Goals (SDGs) Achievement Programme, but the utilisation of funds stood at only Rs59.99 million in the first four months of FY27.
The Federal Education and Professional Training Division has so far utilised Rs6 billion in the first four months of the ongoing fiscal year. The Higher Education Commission (HEC) utilised Rs4 billion.
The National Health Services, Regulations and Coordination Division has so far utilised Rs6.6 billion of the PSDP funding in the current fiscal year. The Planning, Development and Special Initiatives Division utilised Rs2.15 billion.
The Railways Division utilised Rs4 billion from the PSDP funds. The Special Investment Facilitation Council Division has so far utilised Rs72.8 million in the first four months of the current fiscal year.
