She calls for expansion of the tax base, weighting of climate vulnerability, permanent NFC secretariat at the government forum
Senior Provincial Minister Marriyum Aurangzeb attending the Pakistan Governance Forum in Islamabad. PHOTO: EXPRESS
Senior Provincial Minister Marriyum Aurangzeb attended the Pakistan Governance Forum in Islamabad on Friday, organized by the Federal Planning and Development Division, where she presented a comprehensive analysis of the objectives, challenges and current fiscal realities of the National Finance Commission (NFC) Award, while stressing the need to protect the rights of smaller provinces.
She stated that the NFC is the constitutional backbone of Pakistan’s fiscal federalism and basically a trust agreement between the federation and the provinces, adding that it should function as a true partnership between the federal government and the federating units, ensuring transparency, fairness and cooperation in all fiscal matters.
The minister noted that any future NFC framework must begin with a realistic assessment of national debt service obligations, defense funding requirements, climate vulnerability and water security challenges, which together place significant pressure on the federation’s fiscal space. She stressed that these structural pressures need to be factored into any sustainable resource allocation model and that fiscal pressure at the center cannot by default translate into fiscal compression at the provincial level, particularly in terms of service delivery and human development infrastructure, including health, education and productivity sectors.
Highlighting the increasing fiscal and data pressures, Aurangzeb emphasized the importance of maintaining strong and sustainable defense spending, calling it indispensable for national security and stability. She called for a careful reassessment of defense spending and data-driven financial services funding to ensure sustainability without compromising essential national priorities.
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She stressed that NFC sustainability does not mean redistributing scarcity but increasing the national revenue pie so that both the federation and the provinces benefit more equitably and sustainably. She highlighted that broadening the tax base, improving the tax-to-GDP ratio, encouraging provincial revenue generation and promoting economic growth are essential to ensure long-term fiscal stability.
The minister also recommended that future NFC allocations encourage provincial revenue generation, promote export growth, industrial expansion, SME formalization and human development outcomes, while encouraging public-private partnerships (PPPs) in service delivery frameworks at all levels to ensure efficiency, innovation and wider citizen access.
Emphasizing future preparedness, Aurangzeb advocated dedicated funding streams for climate resilience, forest conservation, archeology conservation and flood rehabilitation initiatives. She suggested institutionalizing the NFC by establishing a permanent secretariat driven by data science with a systematic review and feedback mechanism for performance indicators to ensure alignment between national and provincial priorities.
She also called for a review of the weighting of population in the NFC formula and the introduction of climate vulnerability as a formal indicator to make allocations fairer and more forward-looking.
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Aurangzeb further recommended introducing sectoral and periodic review mechanisms to ensure continuous evaluation and reform, alongside a consultative review of the population-based formula involving all stakeholders.
She reaffirmed her commitment to protecting the rights of smaller provinces and supported the adoption of a performance-based reward and incentive model to promote fiscal accountability, governance improvements and enhanced service delivery through PPPs.
Concluding his address, Aurangzeb emphasized that a strong, united and sustainable NFC is essential for national cohesion and called for a coordinated strategy for water conservation and construction of small and large dams to ensure Pakistan’s long-term economic resilience. She added that national unity will be the natural consequence of a fairer, transparent and sustainable NFC.
