The federal government is considering a new financial arrangement for Gilgit-Baltistan that could provide the region with a more predictable share of national resources while broader discussions continue over its constitutional and legal status. Federal Minister for Law and Justice Senator Azam Nazeer Tarar said consultations were underway on the region’s future administrative and constitutional framework, with the government also examining a mechanism that could give Gilgit-Baltistan a share in the National Finance Commission (NFC) award. The development comes as the region continues to rely on annual financial grants from the federal government, while successive Gilgit-Baltistan administrations have sought a formal share under the NFC system. According to officials, the proposed framework is intended to address long-term financial sustainability and create a more transparent and predictable mechanism for fiscal transfers to the region.
The issue is linked to the constitutional position of Gilgit-Baltistan, which currently prevents the region from becoming a formal member of the NFC without a constitutional amendment. According to Gilgit-Baltistan Chief Minister Amjad Hussain Advocate, the federal Finance Division has raised this constitutional limitation and suggested an interim arrangement modelled on the financial agreement between the federal government and Azad Jammu and Kashmir. The proposed arrangement would remain in place until Gilgit-Baltistan becomes a constitutional part of Pakistan and is formally included in the NFC. The Gilgit-Baltistan Assembly has already unanimously approved the proposed financial agreement, following approval by the regional cabinet. The arrangement is being considered as a way to provide greater financial stability while the wider constitutional question remains under discussion.
The region is currently facing a significant gap between its financial requirements and available resources. The chief minister said Gilgit-Baltistan has an estimated requirement of around Rs320 billion and faces a shortfall of approximately Rs17 billion. Under the proposed agreement, the federal government would provide Rs250 billion to the region. The proposal is expected to improve the region’s ability to meet its financial requirements and support greater stability in public finances. The chief minister also argued that the AJK-style arrangement should ultimately be linked to the constitutional amendment required for Gilgit-Baltistan’s inclusion in the NFC. Until that process is completed, the interim mechanism would provide a framework for federal support while avoiding the constitutional barrier to direct NFC membership.
The federal government has also established a high-level committee to examine the broader financial, governance and development challenges facing Gilgit-Baltistan. The committee, chaired by Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal, has reviewed areas including long-term financial sustainability, hydropower development, power-sector reforms, climate resilience, digital connectivity, public service delivery and development priorities. A key part of its work is the development of a transparent resource-sharing mechanism based on NFC principles. The committee is expected to submit proposals for an NFC-based financial framework that could provide Gilgit-Baltistan with more predictable fiscal transfers. For the financial sector, the proposed framework could also have wider implications by improving the region’s fiscal planning and creating greater clarity around public-sector funding and development spending.
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