For the first time in the country's history, the federal government has deducted Rs34.839 billion from the grant receipts of all four provinces under Article 164 of the Constitution. This deduction occurred during the first two months of the 2026-27 financial year, out of a total projected earmarked amount of Rs1.035 trillion.
Top official sources in the Finance Division reported that the Centre and the four provinces had reached an agreement before the 2026-27 budget announcement. Under this deal, the provinces agreed to provide Rs1,035 billion as grants to the federal government from their National Finance Commission (NFC) share to assist in meeting obligations for the $7 billion IMF programme for FY27. While Minister for Finance Muhammad Aurangzeb stated this arrangement would continue for the medium term, he did not provide a specific timeframe because a new NFC Award is currently absent.
The federal government has decided in principle to use these resources, collected as Non-Tax Revenue (NTR), for water resources. The Economic Coordination Committee has already approved the first instalment as a Technical Supplementary Grant for the K-IV in Karachi and the Bhasha and Dasu hydropower projects. The government intends to divert these resources in phases, continuing deductions based on FBR revenue collection and the agreed formula under Article 164 of the 1973 Constitution.
Regarding broader spending, federal ministries, divisions, and attached departments have used Rs74.655 billion for development projects so far, out of a total Rs682.485 billion allocated for the Public Sector Development Programme (PSDP) for FY27.
Water resource development was allocated Rs103.086 billion, with the federal government authorizing Rs90 billion of that amount. However, only Rs18.726 billion was utilized during the first four months of the fiscal year (July-October). This remained the second-largest head for development fund utilization, following the provinces and special areas, which saw Rs23.8 billion in spending.
Other spending figures for the first four months of FY27 include:
The Cabinet Division authorized Rs64 billion for the Parliamentarians' Sustainable Development Goals (SDGs) Achievement Programme, but only Rs59.99 million has been used.
The Federal Education and Professional Training Division utilized Rs6 billion.
The Higher Education Commission (HEC) utilized Rs4 billion.
The National Health Services, Regulations and Coordination Division utilized Rs6.6 billion.
The Planning, Development and Special Initiatives Division utilized Rs2.15 billion.
The Railways Division utilized Rs4 billion.
The Special Investment Facilitation Council Division utilized Rs72.8 million.
