A dispute over resource sharing between the federation and provinces has emerged as a major reason for the delay in the federal budget, as differences persist over the formula for distributable revenue.
According to sources, the federal government has demanded Rs1,200 billion in financial resources from the provinces, but the provinces have refused to surrender their share.
Sources said the Centre wants to provide only Rs8,200 billion to the provinces in the new budget. However, the provinces’ share under the existing arrangement is estimated at around Rs9,400 billion, creating a major gap in negotiations.
Further talks are expected as both sides try to reach consensus on the resource-sharing issue.
Funds for defence, security, relief
The federal government plans to spend any additional money received from the provinces on defence, national security and public relief measures.
Also Read: Budget 2026-27 prioritises defence, infrastructure
Sources said the Centre has demanded an additional Rs650 billion from Punjab and Rs300 billion from Sindh. It has also sought Rs180 billion from Khyber Pakhtunkhwa and Rs110 billion from Balochistan.
NFC changes require legal process
Any change in the National Finance Commission award requires legislation or the consent of the provinces. The issue remains sensitive because provinces are not ready to give up their constitutional share in federal resources.
Sources said the federal government has agreed to increase the development budget for Sindh from Rs50 billion to Rs62 billion. The move comes as negotiations continue between the Centre and provinces over the broader resource-sharing formula.
Punjab's concession proposed for federation
Meanwhile, the Punjab government has finalised the outline of its budget for fiscal year 2026-27, with the total budget estimated at Rs5.131 trillion.
According to sources, the province is also ready to offer a financial concession of Rs570 billion to the federal government, a move that could help the Centre reduce its fiscal deficit and meet International Monetary Fund (IMF) targets.
Also Read: KP CM warns of NEC boycott over 'injustice’ in federal funds
Sources said Punjab is expected to receive Rs3.793 trillion from the divisible pool under the National Finance Commission (NFC) Award. In addition to federal transfers, the province is targeting revenue income of Rs1.33 trillion from its own provincial sources.
The projected inflows form the foundation of the province’s largest-ever budget framework.
Budget likely on June 12
Federal Minister Tariq Fazal Chaudhry said the federal budget is likely to be presented on June 12. He said a summary has been sent to convene sessions of both the National Assembly and Senate.
According to him, it has been proposed to convene the National Assembly session on June 10 at 5pm, while the Senate session is proposed for June 10 at 4pm.
