Islamabad:
The Federal Government postponed on Thursday the first meeting of the National Finance Commission (NFC) at the request of Sindh that sought the postponement due to the flood situation, while the technical member of Baluchistan also retired even before the commission met.
The Ministry of Finance issued a notification to delay the meeting hours before the commission was planned to hold its single session in Islamabad.
“It is reported that upon receiving the Sindh government application, postponing the inaugural meeting of the eleventh NFC due to an imminent flood situation, the NFC meeting scheduled to be held on Friday (today), is postponed,” according to the NFC secretary of the Ministry of Finance.
The vast parts of the country have been flooded in one of the worst floods in recent years, which inflicts, so far, the damage from the northern mountains to the Punjab plains. Sindh is prepared to prepare the waters of the flood soon.
The NFC includes nine members with the Federal Finance Minister Muhammad Aurengzeb, as its president and two members of each of the provinces. But the NFC Secretariat has informed eight members about their decision to cancel the meeting.
He did not notify Baluchistan’s technical member, Farmanullah, about the decision. The Ministry of Finance said that Baluchistan’s technical member excused to join the commission due to his other commitments.
Nasir Mahmood Khosa, former secretary and former executive director of the World Bank, is a technical member of Punjab. Sindh has retained Dr. Asad Sayeed, while Dr. Musharraf Rasoo Cyan represents Khyber-Pakhtunkhwa. Baluchistan had brought Farmanullah as his technical member, who has been excluded from the latest NFC notification.
The president of Pakistan has constituted the 11th NFC to decide a new formula for the distribution of federal taxes between the center and the provinces and between the provinces.
According to the seventh 2010 NFC award, provincial participation had increased by 10% to 57.5% of the total federal divisible group without giving them additional responsibilities. This contributed to a massive increase in public debt due to the unsustainable budget deficit that the federal government has been executing since 2010.
The Minister of Finance, Senator Muhammad Aurengzeb, is the president of the Nine Members commission. The four provincial finance ministers are the permanent members, while each province has the right to name a technical member.
The successive central governments also unduly retained some of the expenses to achieve their political objectives in the provinces. The Federal Income Board (FBR) could not increase the relationship imposed at 15% for 2015.
It still remains stuck in 10.2% of GDP, which is the 2010 level despite the fact that the massive tax burden changed people. The FBR has also lost the objective of the IMF IMF of the last fiscal year to increase the relationship imposed to GDP to 10.6%.
The sources said that the Federal Ministry of Finance and the provincial finance departments were scheduled to give presentations on fiscal positions. The Ministry of Finance has also sought the help of the World Bank to prepare macroeconomic projections for the next five years.
However, a recent report of the International Monetary Fund (IMF) paints a healthy image of the economy in 2030, which weakens the case of the Ministry of Finance to reduce provincial actions to cover expenses.
The projections made by the FBR and the Planning Commission have also shown healthy trends in 2030, the sources said. The Planning Commission has demonstrated more than 6% growth and mass jump in exports and remittances under its new Uraan Pakistan plan.
According to the IMF report, in 2030, the total income of Pakistan would increase to 16% of GDP and their expense would be limited to only 18.8%. This represents a highly manageable fiscal deficit of 2.8% of GDP, showed the IMF report.
Similarly, public debt and publicly guaranteed, which is currently in 78% of GDP, is shown by the IMF that decreases to 64% in 2030.
The sources said that due to the years of narrative built by federal institutions, provincial governments are under pressure to renounce some of their actions, either in the form of income or collecting some responsibilities of spending.
One of the large ticket elements is RS722 billion in the federal budget for the Benazir Revenue support program, which is a provincial issue. The sources said that federal units can assume responsibility whenever they would administer the beneficiaries instead of the center.
The sources said a province can object to the NFC notification, which mentions certain areas that according to it does not fall in the NFC domain.
The NFC notification establishes that the Commission will discuss and decide issues related to the exchange of financial expenses incurred or to be incurred by the Federation with respect to the subjects and issues that fall within the domain of the provinces and issues related to the exchange of financial expenses incurred or incurred by the Federation or the provinces or both with respect to the transition matters.
