Provinces Receive Rs1,895bn in NFC Award, Q1 FY27
During the opening quarter of the fiscal year 2026-27, Pakistan’s four provinces collectively received Rs1,895 billion from the federal divisible tax pool, as stipulated under the National Finance Commission (NFC) Award. This information was disclosed in official documents published by the Ministry of Finance.
Provincial Shares and Fiscal Performance
Punjab led with the highest fund allocation of Rs942 billion between July and September. The province reported total revenues of Rs1,117 billion and expenditures of Rs784 billion, resulting in a surplus of Rs333 billion during the quarter.
Sindh received Rs479 billion under the same arrangement, with revenues amounting to Rs690 billion and spending at Rs509 billion, yielding a budget surplus of Rs180 billion.
Khyber Pakhtunkhwa was allocated Rs314 billion by the federal government, generating Rs413 billion in total revenues against Rs311 billion in expenditures and a surplus of Rs102 billion.
Conversely, Balochistan obtained Rs158 billion but recorded expenditures of Rs191 billion, surpassing its revenues of Rs175 billion and causing a budget deficit of Rs16 billion.
Details of the NFC Revenue Sharing Formula
The distribution of federal tax revenues among provinces is governed by the NFC Award, initially formulated through Presidential Order No. 5 of 2010 and updated in 2015. Currently, 57.5% of net collections from major federal taxes are allocated to the provinces via the divisible pool, while the federal government retains 42.5%.
The allocation to each province is calculated using a formula based on four key criteria: population (82% weight), poverty and backwardness (10.3%), revenue generation and collection (5%), and inverse population density (2.7%). This formula aims to fairly distribute resources according to demographic and socioeconomic indicators.
Federal Fiscal Overview and Implications for Pakistan
According to the first quarter Fiscal Operations Report, the federal government’s total revenue was Rs6,003 billion with expenditures at Rs4,370 billion. Of the spending, Rs1,700 billion was allocated to public debt interest, Rs495 billion to defense, Rs263 billion on pensions, Rs206 billion on civil governmental functions, and Rs84 billion towards subsidies.
The State Bank of Pakistan also contributed a net profit of Rs1,932 billion in this period, reflecting robust institutional performance.
For Pakistan, the NFC Award distribution is vital as it fuels provincial budgets and supports public services and development projects. The surpluses observed in three provinces indicate fiscal strength and potential for growth, while Balochistan’s deficit highlights ongoing challenges requiring targeted assistance. Understanding these allocations helps citizens and policymakers assess resource flows impacting economic stability and regional equity across the country.
Finance Ministry officials stated that these allocations are closely monitored to ensure timely transfers and effective utilization, underscoring the government’s commitment to fiscal federalism and balanced development.
