‘Provinces asked to help fill massive gap in budget’

• KP finance czar says federal govt facing Rs1.7tr ‘fiscal hole’
• Muzammil Aslam claims Centre in a tight spot due to coalition partners’ needs, IMF ‘over-commitments’

ISLAMABAD: The federal government is having problems formulating the budget, owing to an around Rs1.7 trillion fiscal hole and wants the provinces, particularly Punjab and Sindh, to shoulder a greater financial burden, Khyber Pakht­unkhwa’s finance czar claimed on Wednesday.

Speaking at a news conference, KP Ad­­viser on Finance Muzammil Aslam said the uncertainty following the cancellation of National Economic Council (NEC) meeting and the rescheduling of Annual Plan Coordination Committee (APCC) was very concerning for the markets, as was evident from the massive re­­cent plunge at the Pakistan Stock Exchange.

He said the NEC meeting called for June 3 had been unexpectedly canceled without any reason and without a new date being set, while the APCC meeting was also earlier canceled on May 21 without advance notice, and then held on June 1.

Aslam’s contentions seemed to echo points recently made by PPP leader Syed Naveed Qamar. In a recent appearance on DawnNewsTV, he said that the federal government did not have adequate funds to allocate to major heads, such as defence, debt servicing and pensions, adding that the provinces had also been asked to contribute to make up the shortfall.

Speaking to reporters on Wednesday, Aslam said the Centre did not expect the healthy profits next year and was banking on the petroleum levy, and more funds from provinces to shore up its kitty.

He said Finance Minister Muhammad Aurangzeb had earlier suggested about Rs1.7tr share out of provincial shares of the divisible pool by revisiting some taxes, like customs duties. Under this scheme, the Centre had indicated it would need a Rs700-800bn slice from Punjab, Rs500bn from Sindh and Rs200bn from KP, but claimed there had been no follow-up decision in this regard.

Highlighting Planning Minister Ahsan Iqbal’s dismay, Aslam said the government was taking its time to satisfy the demands of its coalition partners, and was finding it difficult to put together a budget that would also be acceptable to the IMF, chiefly the 2pc target for primary budget surplus.

He claimed the federal government had “over-committed” with the IMF on revenue, which was one of their key challenges. On the other hand, he said, no stakeholders were ready to stand with the finance ministry on the expenditure side.

“When you formulate budgets in such pressures, there would always be infighting and coalition partners would not get the budget passed,” he said adding the PPP’s leadership was spending long hours at the finance ministry which was matter of grave concern.

He said in one of the recent meetings, the Centre asked the provinces to extend a helping hand in revenue generation and demanded Rs430bn in additional revenue in the coming fiscal year through taxes on property and agricultural income.

Under that target, he said the KP was required to contribute Rs35bn but in a subsequent letter, the province was asked to generate Rs60-65bn and similar demands were made to other provinces. He said this additional demand had been raised because of ongoing infighting among coalition partners.

Aslam maintained that the tax relief being floated by the Centre would be only an eyewash, although it may increase the minimum threshold from Rs100,000 per month to Rs150,000 per month, but the resultant gap would then be shifted to other taxpayers. He also maintained that while the provinces were told recently about united efforts towards building wa­­ter resources, development allocations sug­­gested there was no such plan in place.

Published in Dawn, June 4th, 2026