Govt to Deduct Rs. 110 Billion From Provinces NFC Share

Meanwhile, the federal administration has informed the International Monetary Fund (IMF) that it aims to recover more than Rs.

Key points

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• While the administration aims to recover almost Rs, 110 billion in provincial electricity arrears has been reconciled.
• The Finance Division had additionally previously attempted to deduct more than Rs.
• The Power Division informed the IMF that it is installing smart meters to resolve billing disputes with provincial governments.

According to a Tribune report, the matter was discussed during the ongoing IMF negotiations, with the lender raising reservations over the fiscal impact of the move. The IMF was informed that the Power and Finance divisions had agreed on a mechanism to recover the outstanding amount from provincial NFC shares.

At least Rs. While the administration aims to recover almost Rs, 110 billion in provincial electricity arrears has been reconciled. As sources indicate familiar with the discussions, 50 billion shortly. The federal administration has previously attempted to adjust such dues from provincial NFC shares, but provincial governments resisted the move. Pakistan-IMF Auto Policy Discussions Stall Over Draft Objections.

As the report notes, the proposed deductions could face a legal and administrative hurdle since the State Bank of Pakistan cannot deduct capital from provincial shares without written consent and debit authority from the respective provincial governments.

For context, the Finance Division had additionally previously attempted to deduct more than Rs. 6 billion per month from Khyber-Pakhtunkhwa's NFC share against a reverse cash grant under the Rs. 1.036 trillion National Economic Initiative. Nevertheless, the deduction could not be produced after the provincial administration refused to provide debit authority to the central bank.

For context, the IMF has triggered concern that deductions from provincial shares could further strain provincial revenues. The provinces are already required to generate a Rs. 1.7 trillion cash surplus and provide Rs. 1.036 trillion in cash grants to the federal administration. Provincial governments have additionally rationalized their development aims to create fiscal space for the grants.

Meanwhile, the Power Division informed the IMF that it is installing smart meters to resolve billing disputes with provincial governments.

Notably, the discussions additionally covered the power sector's circular debt. It climbed by Rs. 61 billion during FY26 to Rs. 1.675 trillion. The Power Division attributed the growth to lower budgeted subsidies and a payment dispute with K-Electric. Meanwhile, the IMF reportedly questioned why savings were not applied to reduce the circular debt and stated it was becoming tough to defend the debt position before its Executive Board. Stay Connected with ProPakistani.

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Taken together, the developments around govt to Deduct Rs. 110 Billion From Provinces NFC Share point to a situation that is still moving, and the coming days should bring more clarity.