The government will hold open debates and listen to the position of the provinces, says the Minister of Finance
The inaugural meeting of the 11th National Finance Commission concluded with all parties agreeing to include Khyber-Pakhtunkhwa’s share in the NFC award after the merger of FATA and PATA in the province. A working group is expected to be formed to review federal and provincial involvement in the NFC award.
The 11th NFC was established on August 22 of this year to finalize a new award for the distribution of federal resources divisible between the center and the provinces. Its first session, scheduled for August 27, was postponed several times, initially to August 29 and then to November 17 and 18, due to unspecified reasons and requests from the Sindh government and the prime minister’s office.
In his opening remarks, Finance Minister Muhammad Aurangzeb highlighted that this meeting is an important opportunity for constitutional accountability and cooperation. He noted that the deadline for the 10th NFC Award ended on July 21 this year, which increases the importance of today’s meeting.
According to the Finance Minister, the federal government was determined that the inaugural meeting of the 11th NFC would be held without delay. “The Prime Minister himself has been very interested in this meeting taking place as soon as possible.”
Aurangzeb acknowledged that the provinces have also shown a strong commitment to fulfill this constitutional responsibility on time.
The Minister of Finance affirmed that the discussions will be carried out with an open mind and without prejudice, stressing that the federal government must listen to the position of the provinces. He expressed confidence that the provinces will also move forward in a spirit of constructive cooperation.
Read: Center proposes cuts in provincial dues ahead of crucial NFC talks
Aurangzeb thanked the provinces for signing the National Fiscal Compact, saying “it is a testament to our shared determination and ability to work together in the national interest.”
The Finance Minister highlighted that the NFC plays a crucial role in the fair distribution of resources, fiscal stability and sustainable economic growth of the country. “Our ultimate goal is to successfully complete the matters related to the 11th NFC Award.”
Concluding the meeting, Financial Advisor Muzammil Aslam said, “The National Finance Commission (NFC) meeting was held in a cordial atmosphere. Major provinces have extended their support to smaller provinces, which is a welcome development.”
“All parties also supported the inclusion of Khyber-Pakhtunkhwa’s share in the NFC award following the merger of FATA and PATA in the province. A working group will be formed to review the federal and provincial shares in the NFC award.”
Aslam said the task force is prepared to examine other legal matters related to the federal and provincial actions, and opinions will be sought from the Legal Division and the Attorney General.
Sindh Chief Minister Murad Ali Shah, speaking to the media after the NFC meeting, also said that the session was held in a positive atmosphere. He added that “this was an initial meeting, focused on the way forward and scheduling the next session.”
It was agreed that the Ministry of Finance will prepare a joint statement about the meeting, share it with the provinces and disseminate it to the media.
Read more: KP to participate in NFC session despite reservations: CM Afridi
Share restructuring
As the inaugural meeting of the National Finance Commission concludes, the performance of the provinces takes center stage, particularly Khyber-Pakhtunkhwa. Planning Minister Ahsan Iqbal has proposed multiple options to redistribute resources that would benefit the Center and smaller federated units.
Despite giving more weight to variables that strengthen the fiscal position of smaller provinces, KP’s share would increase from 1% to 3% in the range of 15.7% to 17.1%, as shown in the details of the proposals presented to Prime Minister Shehbaz Sharif.
The KP government claims that its share should increase between 6% and almost 20% after the merger of the former tribal districts.
Federal government sources said that during substantive discussions, provinces showed some willingness to share federal expenditures, but were not ready to take a direct hit on their revenues.
“While the NFC Award envisaged a shared responsibility towards revenue generation, provincial revenues have also not expanded in line with the NFC Award objectives,” according to the Ministry of Planning report.
According to the current NFC Award, population dominates with a weight of 82%, but poverty, income generation and inverse population density are only marginally important. The Planning Ministry has proposed some major changes in the formula, which would reduce Punjab’s share by about 10% and Sindh’s share would also reduce half a percentage.
Also read: Kundi denies any attempt to impose governor’s rule in KP
However, KP’s share would increase in the range of 1% to 2.6% and Balochistan’s share could rise up to 3%. Islamabad Capital Territory can get up to 5% share for the first time.
KP reserves
Sohail Afridi has stated that the federal government owes KP Rs 1.3 trillion under the NFC and highlighted that although the former tribal districts were administratively merged with the province in 2018, their financial integration was yet to be completed.
Afridi has urged the federal government to consider KP’s proposals for lasting peace, warning that “decisions taken behind closed doors” negatively affect the province. He added that if the center adopts the province’s recommendations, the KP government will take responsibility for implementing them and maintaining law and order, stressing that all stakeholders must be included in decisions regarding peace.
Speaking outside Adiala Jail, Sohail Afridi said I came here after attending the NFC meeting.
I presented KP’s position, pointing out that after the 25th Amendment, the tribal districts were merged into the province, but they were not being given their fair share. I said this was unconstitutional.
In principle, the participants agreed. It was decided that a subcommittee will be formed next Wednesday and will present its recommendations by January 8. The next NFC meeting will take place in January.
The people of KP have made immense sacrifices in the fight against terrorism and our infrastructure has suffered serious damage. Unfortunately, we have not been given our fair share.
It was disappointing to see today that the people of KP were being denied what is rightfully theirs, while three other provinces were being given space. However, we were assured that our rights would be respected.
Since our government took office in 2018, two NFC meetings have been held. Following the regime change operation in 2022, these meetings could not continue. We hope that the people of KP will now receive their fair share.
The NFC meeting, initially scheduled for 11:00 a.m. to 11:15 a.m., continued until 12:40 p.m.
