Islamabad:
The Federal Government has formally begun internal consultations to end its position before negotiations on the Prize of the New National Finance Commission (NFC), with options under consideration to link more than a tenth of the provincial actions with their performance in the social and environmental sectors.
According to official sources, the center is also wearing proposals to allocate a part of the Federal Divisible Group for large dam projects, as well as to make explicit assignments for the territory of the capital of Islamabad and other special areas.
This week a meeting of the central ministerial team of the Government in Q Block, the headquarters of the Ministry of Finance was held. The meeting was attended by laws of laws, planning, finance, economic issues in addition to the key bureaucratic aid of the prime minister.
In the light of the discussions, it has been decided that the federal government would present a case to recover a part of what had been given to the provinces 16 years ago, either through the back expenses or take a cake of the income, sources said.
The Ministry of Finance is preparing a document to show how federal government finances would be seen in terms of public debt and budgetary deficits after five years. The issue of the document will be that the existing 57.5% of the divisible group that the provinces obtain must be reduced and the cuts must be placed in the expenses that are the responsibility of the provinces but that the center is incurred in their own compulsions.
In a prelude to the NFC negotiations, the Minister of Planning, Ahsan Iqbal, had written to the prime minister last month, urging him to immediately begin the discussions to save the federation of acute fiscal stress.
The center has only 42.5% participation and is also responsible for the expenses in Azad Jammu and Cashmira, Gilgit-Baltistan and the ICT of the divisible group to guarantee full participation in the national development of its citizens.
Due to the limited fiscal space and a higher expense in debt services, the federal government does not remain with sufficient fiscal space for development. The minister said that the Public Sector Development Program (PSDP) has been reduced alarmingly, from 2.6% of GDP in 2018 to only 0.8% in 2025.
The Ministry of Finance informed federal ministers this week that Sindh has raised objections to the proposals made by the Minister of Planning to reverse the NFC and that similar objections of Punjab are also expected, the sources said.
They said that during these start meetings it has been discussed to link the transfer of resources to the provinces with the improvement in social and environmental indicators.
One of the initial options is that at least 10 to 15% of provincial actions in federal taxes must be linked to improvements in education, health, population management and climatic indicators. The Government also wants to encourage provinces for fiscal efforts by linking resources with fiscal efforts, sources said.
One of the ministries has also proposed that a part of the divisible group must be reserved before making transfers with the purpose of building Mega dams and finance higher education. They said that dams are now a matter of national security and that the provinces should contribute to it. Under the seventh NFC award, Khyber Pakhtunkhwa obtains 1% of the divisible group to mitigate the impact of war on terror.
The Federal Government is also considering demanding explicit assignments for the capital territory of Islamabad, Gilgit-Baltistan and Azad Jammu & Cashmira, which are the responsibilities of the center.
Another significant consideration of the center is that transfers to the provinces must also be related to subsequent allocations for local governments, the sources added.
The federal government believes that there is an inequality in the distribution of resources between the center and the provinces and between the provinces. However, he has not yet notified the new National Finance Commission, after the last one that Lapó a month ago.
The spokesman of the Qumar Abbasi finance ministry did not comment for this article.
The sources said that in the light of the discussions held this week among the federal ministers, another meeting will take place at the beginning of the next week to reaffirm the position of the center before calling a formal meeting of the NFC.
The Constitution has ordered that the NFC should be reconstituted every five years to guarantee the fair and updated distribution of resources between the Federation and the provinces. The Constitution also links that provincial actions cannot be reduced below 57.5% of the divisible group, which the government now wants to navigate by reducing the size of the divisible group.
One of the main proposals of the Federal Government will be to transfer Benazir’s income support program to the provinces. For this fiscal year, RS722 billion for the BISP has been assigned, which according to the Constitution is the provincial subject.
The federal government can also propose to reduce the weight of the population in the money distribution formula of 82% to any relationship, which is acceptable to the large provinces, mainly Punjab.
Ahsan Iqbal wrote last month to Prime Minister Shehbaz Sharif that the revision of the 15 -year prize was essential that he survived his five -year constitutional life and required a review to relieve “acute stress” in the federal government. The president of Pakistan is extending the award every year due to a disagreement between the provinces and the center on the new formula.
82% of the NFC is distributed on the basis of the population among the provinces, which is an incentive against population control and also exaggerate the number. The annual growth rate of the population of Pakistan is 2.6%, which is close to the annual economic growth rate and is highly unsustainable. The current horizontal distribution is very weighted (82%) towards the population.
The minister has also proposed to include environmental resilience as a new criterion by adding indicators such as forest coverage, climate adaptation investments and reforestation efforts. Recent floods in Khyber-Pakhtunkhwa are also due to the rapid reduction of the forest area, according to weather experts.
