Islamabad:
The federal government on Thursday postponed the first meeting of the National Finance Commission (NFC) at the request of SINDH, who sought postponement due to the flood situation, while Balochistan Technical Member also bent before the Commission met.
The Ministry of Finance issued a message to delay the meeting hours before the Commission was planned to hold its virgin session in Islamabad.
“It is informed that after receiving the request from the government in Sindh, to postpone the initial meeting of the 11th NFC due to imminent flooding situation, the NFC meeting, which is planned Friday (today), is postponed,” according to the NFC Secretariat for the Ministry of Finance.
Huge parts of the country have been flooded in one of the worst floods in recent years and so far inflicts the damage from the northern mountains to Punjab’s plains. Sindh is prepared to stiffen the flooding water soon.
The NFC consists of nine members with federal Finance Minister Muhammad Aurangzeb as its chairman and two members from each of the provinces. But the NFC Secretariat has informed eight members of its decision to cancel the meeting.
It did not inform Balochistan’s technical member Formanullah of the decision. The Ministry of Finance said the technical member of Balochistan apologized to join the Commission because of his other obligations.
Nasir Mahmood Khosa, former secretary and former Director of World Bank, is a technical member of Punjab. Sindh has preserved Dr. Asad Sayeed, while Dr. Musharraf Rasool Cyan represents Khyber-Pakhtunkhwa. Balochistan had brought in Farmanullah as his technical member, who has been excluded from the latest NFC notification.
The president of Pakistan has put together the 11th NFC to decide a new formula for distributing federal taxes between the center and the provinces and among the provinces.
According to the 7th NFC allocation in 2010, the provincial proportion had increased by 10% to 57.5% of the total federal divisive pool without giving them further responsibility. This contributed to a massive increase in public debt due to the unsustainable budget deficit that the federal government has been running since 2010.
Finance Minister Senator Muhammad Aurangzeb is chairman of the nine member commission. The four provincial finance ministers are the regular members, while each province has the right to nominate a technical member.
Successful central governments also unnecessarily retained some of the costs of achieving their political goals in the provinces. The Federal Board of Revenue (FBR) failed to increase the tax-to-BNP ratio to 15% in 2015.
It still remains fixed at 10.2% of GDP, which is the 2010 level despite the massive tax burden that was changed to the people. FBR has also missed the last financial year’s goal to increase the tax-to-BNP ratio to 10.6%.
Sources said the federal Ministry of Finance and the provincial financing departments were planned to give presentations on the fiscal positions. The Ministry of Finance has also sought help from the World Bank to prepare macroeconomic projections in the next five years.
However, a recent report from the International Monetary Fund (IMF) is painting a healthy picture of the economy by 2030, which weakens the case of the Ministry of Finance to cut provincial shares to comply with the expenses.
The projections made by FBR and Planning Commission have also shown healthy trends in the year 2030, the sources said. The Planning Commission has shown over 6% growth and massive jumps in export and transfers under its new Uraan Pakistan plan.
According to the IMF report, by 2030, Pakistan’s total turnover would increase to 16% of GDP and its expenses would be limited to only 18.8%. This represents a very manageable tax deficit of 2.8% of GDP, the IMF report showed.
Likewise, the public and public guaranteed debt, currently at 78% of GDP, is shown by the IMF falling to 64% in the year 2030.
The sources said that the federal institutions, due to many years of narrative built by the federal institutions, are under pressure to abandon some of their shares, either in the form of revenue or choose some responsibilities for expenses.
One of the major ticket items is RS722 billion in the federal budget for the Benazir Income Support program, which is a provincial topic. The sources said the federal units can take that responsibility, provided they would control the recipients instead of the center.
The sources said that a province can object to the NFC message, which mentions certain areas that do not fall in the NFC domain.
The NFC message states that the Commission will discuss and decide questions relating to the sharing of financial expenses incurred or must be incurred by the federation with regard to issues and issues that fall within the domain of the provinces and issues relating to the sharing of financial expenses, or to be incurred by federations or provinces or both in connection with trans-organizing affairs.
