Differences between the federal government and provinces over the distribution of financial resources have emerged as a major reason behind delays in the upcoming federal budget, sources said on Tuesday.
According to sources, both sides have yet to reach a consensus on the formula governing divisible tax revenues under the National Finance Commission (NFC).
Further rounds of negotiations are expected in an effort to resolve the issue. If an agreement is reached, the federal budget is likely to be presented on June 12.
Centre Seeks Additional Fiscal Space
Sources said the federal government has sought around Rs1,200 billion in additional fiscal space.
However, the provinces have resisted the proposal and have refused to give up their constitutional share under the NFC award.
The disagreement has delayed the finalisation of budgetary allocations and intensified discussions between federal and provincial authorities.
Additional Funds Planned for Defence and Relief Measures
According to sources, the federal government intends to use any additional resources for defence, national security, and public relief initiatives.
Officials believe the extra funds could help address rising security needs while also providing support to citizens amid economic challenges.
Provinces Expected to Receive Rs8.2 Trillion
Under the proposed arrangement, the federal government plans to allocate around Rs8,200 billion to the provinces.
However, the total provincial share in the new budget is estimated at nearly Rs9,400 billion, highlighting the gap between the federal proposal and the amount provinces are entitled to receive.
Centre Seeks Contributions From Provinces
Sources said the federal government has also requested additional contributions from the provinces.
Under the proposal, Punjab would contribute Rs650 billion, Sindh Rs300 billion, Khyber Pakhtunkhwa Rs180 billion, and Balochistan Rs110 billion.
Provincial governments have so far remained reluctant to accept any reduction in their share of resources.
Sindh Development Budget Set to Increase
Despite the broader disagreement, sources said both sides have reached an understanding regarding Sindh’s development allocation.
Under the agreement, Sindh’s development budget will increase from Rs50 billion to Rs62 billion in the upcoming fiscal year.
Negotiations between the centre and provinces are expected to continue in the coming days as authorities seek to finalise the budget framework and avoid further delays.