The government will keep discussions open, listen to the provinces’ position, says FinMin
The constituent meeting of the 11th National Finance Commission ended with all parties agreeing to include Khyber-Pakhtunkhwa’s share in the NFC award after the merger of FATA and PATA in the province. A working group is expected to be formed to review the federal and provincial stakes in the NFC award.
The 11th NFC was set up on August 22 this year to finalize a new award for the distribution of federal divisible resources between the Center and the provinces. Its first session, scheduled for August 27, was postponed several times, first to August 29, then November 17 and 18 due to unspecified reasons and requests from the Sindh government and the Prime Minister’s Office.
In his opening remarks, Finance Minister Muhammad Aurangzeb noted that this meeting is an important opportunity for constitutional responsibility and cooperation. He noted that the period of the 10th NFC Award ended on July 21 this year, which adds to the significance of today’s meeting.
According to the finance minister, the federal government was determined that the constituent meeting of the 11th NFC would be held without delay. “The Prime Minister himself was very interested in ensuring that this meeting takes place as soon as possible”.
Aurangzeb acknowledged that the provinces have also shown strong commitment to fulfill this constitutional responsibility on time.
The Finance Minister has stated that they will conduct discussions with an open mind and without any bias, stressing that the federal government must listen to the position of the provinces. He expressed confidence that the provinces will also move forward with a spirit of constructive cooperation.
Read: Center proposes provincial share cuts ahead of crucial NFC talks
Aurangzeb appreciated the provinces for signing the National Fiscal Compact and said that “it is a testimony to our common resolve and our ability to work together for the national interest”.
The Minister of Finance highlighted that NFC plays a crucial role in the fair distribution of resources, fiscal stability and sustainable economic growth in the country. “Completing the proceedings regarding the 11th NFC Award is our ultimate goal”.
As the meeting ended, Finance Adviser Muzammil Aslam said, “The National Finance Commission (NFC) meeting was conducted in a cordial atmosphere. Major provinces have extended support to smaller provinces, which is a welcome development”.
“All parties also supported including Khyber-Pakhtunkhwa’s share in the NFC award after the merger of FATA and PATA in the province. A working group will be formed to review the federal and provincial shares in the NFC award”.
Aslam stated that the task force is set to examine other legal issues related to federal and provincial equities, with opinions to be sought from the Law Division and Attorney General.
Speaking to the media after the NFC meeting, Sindh Chief Minister Murad Ali Shah also said that the session was held in a positive environment. He added that “This was an initial meeting, focused on the way forward and planning for the next session”.
It was agreed that the Ministry of Finance will prepare a joint statement on the meeting, share it with the provinces and release it to the media.
Read more: KP participates in NFC session despite reservations: CM Afridi
Restructuring of share
As the maiden meeting of the National Finance Commission comes to a close, the performance of the provinces comes into focus, especially Khyber-Pakhtunkhwa. Planning Minister Ahsan Iqbal has proposed several options for redistributing resources that will benefit the Center and smaller federating units.
Despite giving more weight to the variables that strengthen the fiscal position of the smaller provinces, the share of KP will increase from 1% to 3% in the range of 15.7% to 17.1%, as detailed in the proposals submitted to Prime Minister Shehbaz Sharif.
The KP government claims its share will increase by 6% to nearly 20% after the merger of the former tribal districts.
The federal government sources said that during the background discussions, the provinces showed some willingness to share the federal expenses, but they were not ready to take a direct hit on their revenue shares.
“While the NFC Award envisioned shared responsibility for revenue generation, provincial revenues have also not expanded in line with the NFC Award’s goals,” according to the Planning Ministry report.
Under the current NFC Award, population dominates with 82% weight percentage, but poverty, income generation and inverse population density have only marginal importance. The Ministry of Planning has proposed some major changes in the formula which would reduce Punjab’s share by around 10% and Sindh’s share would also reduce by half a percentage.
Also read: Kundi rejects any move to introduce governor’s rule in KP
However, KP’s share will increase in the range of 1% to 2.6% and Balochistan’s share may go up to 3%. Islamabad Capital Territory can get up to 5% share for the first time.
KP’s reservations
Sohail Afridi has stated that the federal government owes KP Rs1.3 trillion under the NFC, while highlighting that although the former tribal districts were administratively merged with the province in 2018, their economic integration was not yet complete.
Afridi has urged the federal government to consider the KP’s proposal for lasting peace, warning that “decisions made behind closed doors” are adversely affecting the province. He added that if the Center adopts the province’s recommendations, the KP government will take the responsibility to implement them and maintain law and order, stressing that all stakeholders must be involved in decisions about peace.
Speaking outside Adiala Jail, Sohail Afridi said I came here after attending the NFC meeting.
I presented the position of KP and noted that after the 25th amendment the tribal districts were merged in the province but still they did not get their due share. I said this was unconstitutional.
In principle, the participants agreed. It was decided that a sub-committee will be formed by next Wednesday and it will present its recommendations by January 8th. The next NFC meeting will be held in January.
The people of KP have made huge sacrifices in the fight against terrorism and our infrastructure has suffered serious damage. Unfortunately, we have not received our fair share.
It was disappointing to see today that the people of KP were denied what is rightfully theirs while three other provinces were accommodated. However, we were assured that our rights would be upheld.
Since our government took office in 2018, two NFC meetings have been held. After the regime change operation in 2022, these meetings could not continue. We hope that the people of KP will now get their rightful share.
The NFC meeting, originally scheduled from 11 am to 11.15 am, continued until 12.40 pm.
