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Express Tribune
a day ago
- Business
- Express Tribune
Minister seeks urgent NFC overhaul
Planning Minister Ahsan Iqbal has proposed to urgently review the National Finance Commission award and suggested freezing the population number at 241.5 million and including indicators such as water and climate vulnerabilities for the purpose of money distribution among the federating units. Iqbal made the recommendations to Prime Minister Shehbaz Sharif, urging him to review the 15-year-old award that has outlived its five-year constitutional life and requires a revision to ease "acute stress" on the federal government. The president of Pakistan is extending the award every year due to a disagreement between the provinces and the Center over the new formula. The recommendation has been made at a time when the 10th National Finance Commission has expired on July 21st and the Finance Ministry, which is the Secretariat to the Commission, is in the process of forming a new Commission. Sindh has retained Asad Sayeed and Khyber-Pakhtunkhwa might again be represented by Musharraf Rasool Cyan in the 11th Commission. Nasir Khosa may represent Punjab as its technical member but there is no official notification yet, which has to be issued after the approval of the president of Pakistan. Balochistan has nominated Mr Farman. The planning and development minister has proposed new multi-criteria, for the distribution of resources by focusing on development-oriented formula instead of demographic-dominated award. The minister has suggested to the prime minister that the population numbers should be frozen at the latest census (241.5 million) and its weightage should be reduced from the current level to promote population stabilisation. The 82% of the NFC is distributed on the basis of the population among the provinces, which is an incentive against controlling the population and exaggerating the number too. Pakistan's annual population growth rate is 2.6%, which is near the annual economic growth rate and is highly unsustainable. The current horizontal distribution is heavily weighted (82%) towards population. While population is an essential indicator, this creates adverse incentives against population control and penalizes provinces with better demographic management, stated Iqbal. The planning minister has also recommended including provincial revenue performance as a new criterion to distribute resources. He has written that there is a need to reward provinces with higher tax-to-GDP ratios and stronger digital tax infrastructure. Provinces do not have incentives to expand their narrow tax bases and heavily rely on their shares under the NFC. The minister has also proposed including environmental resilience as a new criterion by adding indicators such as forest cover, climate adaptation investments, and reforestation efforts. According to another important recommendation, Human development outcomes should be linked with transfer of resources and the province should prioritize education, health, and gender equity. The Constitution requires all the five governments to unanimously agree on the new formula and even if one government disagrees no change can be made in the award. The minister also recommended including water vulnerability as another new criterion and suggested allocating funds for provinces investing in sustainable water infrastructure and management. The minister has underlined national unity and inclusion as benchmark for the distribution of money between the Center and the provinces. The Center gets only 42.5% share and is also responsible for expenditure on Azad Jammu & Kashmir, Gilgit Baltistan, and ICT from the divisible pool to ensure full participation in national development for their citizens. The minister said that over Rs150 billion are annually spent by the federal government on development and recurrent obligations in AJK, Gilgit-Baltistan and merged districts and the Islamabad capital territory all from the federal share, while these regions are entitled to have their own share in the divisible pool like other provinces. The federal government is also funding the Benazir Income Support Programme (BISP) to the tune of Rs716 billion, despite social protection being a devolved provincial subject post-18th Amendment. Iqbal said that there was a need to immediately initiate the process for a new National Finance Commission (NFC) Award, adding, it is both a constitutional obligation and a fiscal necessity. Iqbal said that the 7th NFC Award has now been in effect for nearly 15 years — far beyond its intended duration and merits consideration in wake of new realities. He said that the federal government was facing fiscal pressures due to anomalies in the present NFC Award. A fresh NFC Award is, therefore, imperative to ensure that fiscal federalism remains dynamic, equitable, and responsive to Pakistan's evolving development landscape while protecting provinces rights, he added. Due to limited fiscal space and higher spending on debt servicing, the federal government is not left with enough fiscal space for development expenditure. The minister said that the Public Sector Development Programme (PSDP) has shrunk alarmingly - from 2.6% of GDP in 2018 to just 0.8% in 2025. This regression represents not only a constraint on national development but a systemic distortion of constitutional fiscal responsibilities with federal subjects getting underfunded, he added. He also emphasized upon encourage fiscal responsibility and own-revenue generation at the provincial level, and more importantly operationalization of Provincial Finance Commissions (PFCs) The constitutional promise of equity cannot be realized without intra-provincial resource distribution. Provincial Finance Commissions (PFCs), which were envisioned to decentralize resources within provinces, remain largely dormant or non-transparent in their functioning, he added. The new NFC Award should make PFCs' operationalization mandatory as part of the NFC framework, recommended the Planning Minister. Without adequate federal fiscal space, the implementation of flagship national programmes - including Special Economic Zones (SEZs), Digital Pakistan, national grid, dams, human resource development and multi model connectivity infrastructure — remains compromised, stated the Minister.
Express Tribune
24-07-2025
- Business
- Express Tribune
PFC Award controversy leaves governance in limbo
Every couple of years, the Sindh government complains to the federal government that it is not receiving its due share of funds under the National Finance Commission (NFC) Award. However, the provincial government itself behaves no differently when it comes to allocating funds to its own local government bodies. Just as the NFC Award governs the distribution of financial resources from the federation to the provinces, the Provincial Finance Commission (PFC) Award is meant to ensure the fair distribution of financial resources among local bodies within a province. While Sindh complains about the federal government's failure to implement the NFC Award, local bodies across the province, including the Karachi Metropolitan Corporation (KMC), have long-standing grievances against the Sindh government regarding the non-implementation of the PFC Award. According to the Constitution, the federal government must announce a new NFC Award every five years, and similarly, provinces are constitutionally bound to issue a new PFC Award every five years to ensure proper financial distribution among local governments. In Sindh, however, the last NFC Award was announced in December 2009 and came into effect in July 2010. Its term ended in June 2015, but no new award has been issued since. Similarly, the last PFC Award was issued in 2002, and it expired in 2007. Nearly 17 years have passed since the last award expired. Despite this, the Sindh government has yet to announce a new PFC Award, and funds are still being distributed based on the outdated award, creating mounting financial pressures on local bodies. KMC, the province's largest municipal institution, is also facing serious financial challenges due to the delay in the new PFC Award. In its latest budget documents, KMC has specifically highlighted this issue, formally requesting the Sindh government to issue a new PFC Award without further delay. According to KMC's recent budget report, it contributes towards 60 per cent of the octroi tax revenue generated in Sindh but does not receive its share accordingly. Its expenditure, on the other hand, continues to rise. For instance, in the 2023-24 fiscal year, KMC required Rs28.93 billion for non-salary expenses but received only Rs17.98 billion from the Sindh government, leaving a deficit of over Rs11.19 billion for this category alone. While the provincial government fails to allocate the required funds to KMC, it continues to increase the salaries of government employees every year, adding to the corporation's financial burden. Official figures show that while KMC's revenue from octroi taxes has increased by 95 per cent over the past few years, its expenditure on salaries and pensions has gone up by 255 per cent. Naseer Memon, a political economist, opined that the PFC Award was a genuine issue across all provinces. "The provinces force the federal government to devolve powers to the provinces but are not in favour of transferring those powers to the local governments, which are at the foundation of a democratic system. There should be a fair criterion for the distribution of resources through the PFC Award. Unlike the NFC formula where population is the major criteria for distribution of resources, the PFC should have multiple criteria for distribution among local governments including resource collection and backwardness," suggested Memon. On the other hand, Dr Kaiser Bengali, a renowned economist, revealed that the Provincial Finance Commission still did not have constitutional protection. "Until this issue is resolved, the PFC award controversy will continue. Just as the Constitution clearly mentions the functions and powers of the federation and the provinces, it is also necessary to include the functions and financial matters of the local government separately," noted Dr Bengali. When The Express Tribune reached out to Sukkur Mayor and Sindh government spokesperson Arsalan Islam Shaikh regarding the delay in the new PFC Award, he stated that Sindh had been severely affected by natural disasters like COVID-19 and floods over the past several years, which has delayed the announcement of the new PFC Award. "Issuing a PFC Award is a constitutional obligation and it will be finalized soon," assured Shaikh.
Express Tribune
17-07-2025
- Politics
- Express Tribune
ANP sounds alarm over autonomy threat
The Awami National Party (ANP) has announced the convening of a National Jirga in Peshawar on July 26 to address the deteriorating law and order situation, rising incidents of terrorism and target killings, and the party's opposition to the proposed 26th Constitutional Amendment. Speaking at a press conference at Bacha Khan Markaz following a meeting of the party's provincial cabinet, ANP Khyber-Pakhtunkhwa President Mian Iftikhar Hussain said that elders from all walks of life, particularly those from the merged tribal districts, would be invited to the Jirga. He warned that the delay in the National Finance Commission (NFC) Award, attempts to seize control of natural resources, and efforts to roll back the 18th and 25th Constitutional Amendments are all part of a larger conspiracy to undermine provincial autonomy. "This land belongs to our forefathers, and as citizens of this country, we have every right to demand control over our resourceseven if some don't like it," said Mian Iftikhar. He added that new laws aimed at controlling mineral wealth, revival of the tribal Jirga system, and attacks on the 18th Amendment are deliberate efforts to push the tribal areas back into underdevelopment. Calling for justice, he demanded the formation of a judicial commission headed by a Supreme Court judge to investigate the assassination of Maulana Khanzeb, with representation from the martyr's family in the commission. "No one has been arrested so far. If facts are withheld or manipulated, the ANP will expose the truth to the public," he warned. Mian Iftikhar said the National Jirga would formulate a strategy on how to effectively raise these issues at the national level. He stressed that ANP's struggle is not personal, but a fight for peace, ideology, and sovereignty. "We have sacrificed over 1,200 lives. Our workers were targeted, and still, we remained silent. But now, we will not stay silent anymore," he asserted. Calling for political unity, he said it is time for all parties to come togethernot for votes or power, but for the future of coming generations.
Business Recorder
11-07-2025
- Business
- Business Recorder
Population growth, climate change: Aurangzeb identifies ‘critical' existential challenges facing Pakistan
ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb said on Thursday that sustainable economic growth — aimed at realising the vision of Pakistan becoming a $3 trillion economy by 2047 — would remain elusive unless the country squarely addresses two critical existential challenges: climate change and population growth. This, he stated while addressing an event organised by the Ministry of National Health Services, Regulations and Coordination to mark World Population Day. Aurangzeb also supported the call for population to be recognised as a core allocation criterion in the National Finance Commission (NFC) Award. He said that the existing resource-sharing formula needed to evolve to reflect new realities, especially those concerning population and climate-related pressures. Finance minister urges population as key criterion in NFC Award formula The minister agreed with the views expressed by the health and planning ministers, advocating for the inclusion of broader human development indices to guide equitable resource distribution between the federation and provinces. The finance minister underscored that under the leadership of Prime Minister Shehbaz Sharif, the government is pursuing a broad-based reform agenda covering key areas such as taxation, energy, state-owned enterprises, and privatisation. The minister emphasised the need to address the two existential issues of population and climate change to ensure sustainable economic growth. Talking about the 2.55 percent growth rate of population, Aurangzeb said that it has alarming implications for national development, economic planning, and social well-being. Citing the fact that 40 percent of children under five in Pakistan suffer from stunted growth, he warned that the country's future leadership is already at risk. He stressed that addressing stunting and learning poverty requires an integrated, end-to-end approach, encompassing nutrition, sanitation, clean drinking water, birth spacing, and greater awareness—all of which were discussed by scholars and experts at the event. The minister also highlighted the importance of empowering women, who constitute half the country's population, noting that inclusive workforce participation is essential for Pakistan's sustainable development. He reiterated the need to tackle learning poverty, especially among girls, and to invest meaningfully in education and skills development to enable women to contribute productively to the economy. He emphasised the need for a paradigm shift in national budgeting. Rather than compartmentalising federal and provincial finances, he proposed a unified, country-level approach to development spending. Citing this year's development budget of Rs1 trillion at the federal level and Rs4.2 trillion when including provinces, he noted that the real challenge is not the availability of funds but their optimal allocation and prioritisation. Aurangzeb also called for a reorientation of donor engagement and development financing. He remarked that while infrastructure had been the primary recipient of international funding in the past, it is now imperative to direct those resources toward human capital development, particularly in health, education, and population planning. He referenced Pakistan's 10-year Country Partnership Framework with the World Bank, noting that four out of its six pillars focus on population and climate-related issues. He informed the gathering that one-third of the total funding—amounting to nearly $20 billion over a decade, or around $600–700 million annually—will be dedicated to population-related measures. He urged that such resources must be strategically deployed, moving beyond symbolic steps like tax relief on contraceptives, and instead ensuring impactful investments across the board. The minister reaffirmed the government's commitment to prioritising long-term, sustainable solutions to Pakistan's population challenges and leveraging both domestic and international resources to build a healthier, more productive nation. He urged policymakers and development partners to go beyond traditional infrastructure investments and prioritise human capital development. 'We have built roads and power projects, but it's time to invest in people,' he said. 'This is the only way to ensure real, inclusive, and sustainable progress.' The event was attended by Federal Minister for National Health Services Syed Mustafa Kamal, Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal, Minister for Parliamentary Affairs Dr Tariq Fazal Chaudhry, as well as prominent religious scholars, members of civil society, and senior government officials. Copyright Business Recorder, 2025
Business Recorder
10-07-2025
- Business
- Business Recorder
Population growth, climate change: Aurangzeb identifies ‘critical' existential challenges facing country
ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb said on Thursday that sustainable economic growth — aimed at realising the vision of Pakistan becoming a $3 trillion economy by 2047 — would remain elusive unless the country squarely addresses two critical existential challenges: climate change and population growth. This, he stated while addressing an event organised by the Ministry of National Health Services, Regulations and Coordination to mark World Population Day. Aurangzeb also supported the call for population to be recognised as a core allocation criterion in the National Finance Commission (NFC) Award. He said that the existing resource-sharing formula needed to evolve to reflect new realities, especially those concerning population and climate-related pressures. Finance minister urges population as key criterion in NFC Award formula The minister agreed with the views expressed by the health and planning ministers, advocating for the inclusion of broader human development indices to guide equitable resource distribution between the federation and provinces. The finance minister underscored that under the leadership of Prime Minister Shehbaz Sharif, the government is pursuing a broad-based reform agenda covering key areas such as taxation, energy, state-owned enterprises, and privatisation. The minister emphasised the need to address the two existential issues of population and climate change to ensure sustainable economic growth. Talking about the 2.55 percent growth rate of population, Aurangzeb said that it has alarming implications for national development, economic planning, and social well-being. Citing the fact that 40 percent of children under five in Pakistan suffer from stunted growth, he warned that the country's future leadership is already at risk. He stressed that addressing stunting and learning poverty requires an integrated, end-to-end approach, encompassing nutrition, sanitation, clean drinking water, birth spacing, and greater awareness—all of which were discussed by scholars and experts at the event. The minister also highlighted the importance of empowering women, who constitute half the country's population, noting that inclusive workforce participation is essential for Pakistan's sustainable development. He reiterated the need to tackle learning poverty, especially among girls, and to invest meaningfully in education and skills development to enable women to contribute productively to the economy. He emphasised the need for a paradigm shift in national budgeting. Rather than compartmentalising federal and provincial finances, he proposed a unified, country-level approach to development spending. Citing this year's development budget of Rs1 trillion at the federal level and Rs4.2 trillion when including provinces, he noted that the real challenge is not the availability of funds but their optimal allocation and prioritisation. Aurangzeb also called for a reorientation of donor engagement and development financing. He remarked that while infrastructure had been the primary recipient of international funding in the past, it is now imperative to direct those resources toward human capital development, particularly in health, education, and population planning. He referenced Pakistan's 10-year Country Partnership Framework with the World Bank, noting that four out of its six pillars focus on population and climate-related issues. He informed the gathering that one-third of the total funding—amounting to nearly $20 billion over a decade, or around $600–700 million annually—will be dedicated to population-related measures. He urged that such resources must be strategically deployed, moving beyond symbolic steps like tax relief on contraceptives, and instead ensuring impactful investments across the board. The minister reaffirmed the government's commitment to prioritising long-term, sustainable solutions to Pakistan's population challenges and leveraging both domestic and international resources to build a healthier, more productive nation. He urged policymakers and development partners to go beyond traditional infrastructure investments and prioritise human capital development. 'We have built roads and power projects, but it's time to invest in people,' he said. 'This is the only way to ensure real, inclusive, and sustainable progress.' The event was attended by Federal Minister for National Health Services Syed Mustafa Kamal, Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal, Minister for Parliamentary Affairs Dr Tariq Fazal Chaudhry, as well as prominent religious scholars, members of civil society, and senior government officials. Copyright Business Recorder, 2025
