Urges to broaden the tax base, consider climate vulnerability and create a permanent NFC secretariat in the governance forum
Chief Provincial Minister Marriyum Aurangzeb participates in Pakistan Governance Forum in Islamabad. PHOTO: EXPRESS
Provincial Minister Marriyum Aurangzeb on Friday participated in the Pakistan Governance Forum in Islamabad, organized by the Federal Planning and Development Division, where she presented a comprehensive analysis of the current objectives, challenges and fiscal realities of the National Finance Commission (NFC) Award, while emphasizing the need to protect the rights of smaller provinces.
He stated that the NFC is the constitutional backbone of Pakistan’s fiscal federalism and fundamentally a pact of trust between the federation and the provinces, adding that it should function as a true partnership between the federal government and the federated units, ensuring transparency, equity and cooperation in all fiscal matters.
The minister noted that any future NFC framework must begin with a realistic assessment of national debt service obligations, defense funding requirements, climate vulnerability and water security challenges, which together put significant pressure on the federation’s fiscal space. He emphasized that these structural pressures must be taken into account in any sustainable resource distribution model, and that fiscal stress at the center cannot be translated by default into fiscal compression at the provincial level, particularly with respect to service delivery and human development infrastructure, including the health, education and productivity sectors.
Aurangzeb highlighted growing fiscal and data pressures and underlined the importance of maintaining strong and sustainable defense spending, calling it indispensable for national security and stability. He called for a careful reassessment of defense spending and data-driven financing of fiscal services to ensure sustainability without compromising essential national priorities.
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He stressed that the sustainability of the NFC does not mean redistributing scarcity but rather increasing national income so that both the federation and the provinces benefit in a more equitable and sustainable way. He stressed that expanding the tax base, improving the tax-GDP ratio, encouraging provincial revenue generation and promoting economic growth are essential to ensure long-term fiscal stability.
The minister also recommended that future NFC allocations encourage provincial revenue generation, promote export growth, industrial expansion, SME formalization and human development outcomes, while encouraging public-private partnerships (PPPs) in service delivery frameworks at all levels to ensure efficiency, innovation and broader citizen access.
Emphasizing future preparedness, Aurangzeb advocated for dedicated funding streams for climate resilience, forest conservation, archeology preservation and flood rehabilitation initiatives. He proposed institutionalizing the NFC by establishing a data science-driven permanent secretariat, with a mechanism for systematic review and reporting on performance indicators to ensure alignment of national and provincial priorities.
He also called for a review of the weight of population in the NFC formula and the introduction of climate vulnerability as a formal indicator to make allocations more equitable and forward-looking.
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Aurangzeb further recommended introducing sectoral and periodic review mechanisms to ensure continuous evaluation and reform, along with a consultative review of the population-based formula involving all stakeholders.
Reaffirming its commitment to safeguarding the rights of smaller provinces, it supported the adoption of a performance-based incentives and rewards model to promote fiscal responsibility, improvements in governance and greater service delivery through PPPs.
Concluding his speech, Aurangzeb emphasized that a strong, unified and sustainable NFC is essential for national cohesion, and called for a coordinated strategy on water conservation and construction of small and large dams to ensure Pakistan’s long-term economic resilience. He added that national unity will be the natural consequence of a more fair, transparent and sustainable NFC.
