Islam bath:
President Asif Ali Zardari on Friday the 11th National Finance Commission to end a new resource distribution award, set the stage for the center to try to pick up some of the lost fiscal space that the provinces will try to resist.
“In the pursuit of clause (1) In Article 160 of the Constitution, the President of Pakistan is pleased to constitute the 11th National Finance Commission (NFC) with immediate effect,” read a notification of the Ministry of Finance on Friday.
The five -year life of the 10th commission ended last month, which held a few meetings but lost steam after the provinces did not find an incentive to negotiate due to the chances of losing tax space to the center. According to the 7th NFC price in 2010, the proportion of the provinces increased by 10% to 57.5% of the total federal divisible pool without giving them further responsibility.
It contributed to a massive increase in public debt due to the unsustainable budget deficit that the federal government has been running since 2010. The central governments also kept unnecessarily some of the costs of achieving their political goals in the provinces.
Finance Minister Muhammad Aurangzeb is chairman of the nine member commission. The four provincial finance ministers will be the regular members. In addition, each province has the right to nominate a technical member.
Nasir Mahmood Khosa, former secretary and former CEO World Bank would represent Punjab. Sindh has preserved Dr. Asad Sayeed, while Dr. Musharraf Rasool Cyan will again represent Khyber-Pakhtunkhwa. Balochistan has brought in Farmanullah as his technical member.
In a joint working document written by Sajid Amin and Vaqar Ahmad, the authors had claimed that “the future NFC prices include a gradual shift from a need-based distribution of resources to an effectiveness-seeking resources sharing”.
They had proposed to cut the weight of the population by at least 10% in the next two NFC prices; Slash its share with an additional 15% in the following two prices to ultimately reduce its weight to 50% from 82%.
The federal government is already working on some of these mortgage rights. Planning Minister Ahsan Iqbal has already proposed to freeze the population of 241.5 million for the distribution of resources.
According to an internal meeting held this week in the Ministry of Finance, one of the original opportunities considered by the federal government suggests that at least 10% to 15% of the provincial shares of federal taxes must be associated with improvements in education, health, population management and climate indicators. The government also wants to incentive provinces for tax efforts by linking resources with tax efforts, the sources said.
The ministry is also preparing a paper to show what the federal government’s economy would look like in terms of public debt and budget deficit after five years. The theme of the paper will be that the existing 57.5% of the divisible pool that the provinces receive must be reduced and cuts must be placed on the expenses that are the province’s responsibility but are applied by the center due to its own coercion.
According to the conditions of the 11th commission, the NFC will make recommendations to the President of the distribution between the Federation and the provinces of the net proceeds of the taxes mentioned in Klause (3) of Article 160 of the Constitution.
The new commission will also make recommendations on grants for the help of the federal government to the provincial governments. The Commission will investigate borrowers exercised by the federal government and the provincial governments.
It will also discuss and decide questions relating to the sharing of financial expenses, or they must be incurred by the federation in terms of issues and cases that fall within the domain of the provinces and issues relating to the sharing of financial expenses or must be incurred by the federation or provinces or both in terms of transformation.
This is the biggest problem as the center incurs expenses that are not trans -operation and put unnecessary burden on the federal tax. The federal government is funding roads in Punjab, Sindh and Balochistan, which should have been funded by the respective provincial governments.
The new commission will also discuss issues relating to financial expenses for national projects to be shared by the Federation and Provinces; And any other question relating to funding referred to the Commission by the President.
The federal government can ask the provinces to devote part of the divisible pool to the construction of large dams. Dams are now a matter of national security and the provinces should contribute to it.
Under 7. The NFC Prize, Khyber-Pakhtunkhwa gets 1% of the divisible pool to mitigate the impact of the war on terror.
The federal government is also considering demanding explicit allocations to Islamabad Capital Territory, Gilgit-Baltist and Azad Jammu & Kashmir, which is the center’s responsibility.
Another essential consideration from the center is that the transfers to the provinces should also be connected with forward assignments to the local authorities, the sources added.
