Islamabad:
The federal government has officially started internal consultations to finalize its position before negotiations on the new prize of the National Finance Commission (NFC), with options envisaged to link more than a tenth of provincial actions to their performance in the social and environmental sectors.
According to official sources, the Center also weighs proposals to allocate part of the federal divisible pool for major dam projects, as well as to make explicit allowances for the capital territory of Islamabad and other special zones.
A meeting of the main ministerial team of the government took place this week in Q Block – the headquarters of the Ministry of Finance. The rally brought together ministers for the law, planning, finance, economic affairs in addition to the Prime Minister’s key bureaucratic aid.
In light of the discussions, it was decided that the federal government would argue to recover a share of what had been given to the provinces 16 years ago, either by reducing expenses or taking a tart in income, the sources said.
The Ministry of Finance is preparing a document to show what the federal government’s finances would look like in terms of public debt and budget deficits after five years. The theme of the document will be that the existing 57.5% of the divisible pool that the provinces obtain must be reduced and that the cuts must be placed on the expenses which are the responsibility of the provinces but which are engaged by the center because of its own compulsions.
In a prelude to the NFC negotiations, the Minister of Planning Ahsan Iqbal wrote to the Prime Minister last month, exhorting him immediately starting the discussions to save the Federation of Acute Tax Stress.
The center only obtains 42.5% and is also responsible for expenses for Azad Jammu- & Cashmire, Gilgit-Baltistan and the ICT of the divisible Pool to ensure full participation in the national development of their citizens.
Due to the limited budgetary space and higher debt expenses, the federal government is not found with enough budgetary space for development spending. The Minister said that the Public Sector Development Program (PSDP) is alarmingly reduced – by 2.6% of GDP in 2018 at only 0.8% in 2025.
The Ministry of Finance informed the federal ministers this week that the Sindh had raised objections to the proposals made by the Minister of Planning to reverse the NFC and similar objections are also expected from Punjab, the sources said.
They said that during these launch meetings, it was discussed to link resources to the provinces with an improvement in social and environmental indicators.
One of the initial options is that at least 10 to 15% of the provincial actions for federal taxes should be linked to improvements in education, health, population management and climate indicators. The government also wants to encourage the provinces to tax efforts by linking resources to tax efforts, sources said.
One of the ministries also proposed that part of the divisible swimming pool be reserved before making transfers in order to build mega dams and finance higher education. They said that the dams are now a question of national security and that the provinces should contribute to it. Under the 7th NFC price, Khyber Pakhtunkhwa obtains 1% of the divisible pool to mitigate the impact of war on terrorism.
The federal government also plans to demand explicit allowances for the capital of the capital of Islamabad, the Gilgit-Baltistan and Azad Jammu- & Cachemire, which are the responsibilities of the center.
Another significant consideration of the center is that province transfers should also be linked to allowances to local governments, have added sources.
The federal government believes that there are inequalities in the distribution of resources between the center and the provinces and between the provinces. However, he has not yet informed the new National Finance Commission, after the last one, a month ago.
The spokesman for the Ministry of Finance Qumar Abbasi did not comment on this article.
The sources said that in light of the discussions that took place this week among federal ministers, another meeting would take place at the beginning of next week to strengthen the position of the center before the conduct of an official NFC meeting.
The Constitution demanded that the NFC must be reconstructed every five years to ensure fair distribution and update of resources between the Federation and the provinces. The Constitution also links that provincial actions cannot be reduced below 57.5% of the divisible pool, which the government now wishes to navigate by narrowing the size of the divisible pool.
One of the main proposals of the federal government will be to transfer the Benazir income support program to the provinces. For this exercise, 722 billion rupees were allocated to BISP, which under the Constitution is the provincial subject.
The federal government can also propose to reduce the weight of the population in the 82% money distribution formula for any report, which is acceptable for the major provinces, mainly Punjab.
Ahsan Iqbal wrote last month to Prime Minister Shehbaz Sharif that the 15 -year prize exam was a must that survived his five -year constitutional life and required a revision to mitigate the “acute stress” of the federal government. The president of Pakistan extends the price each year due to a disagreement between the provinces and the center on the new formula.
The 82% of the NFC is distributed on the basis of the population among the provinces, which is an incentive to control the population and to exaggerate the number as well. The annual population growth rate of Pakistan is 2.6%, which is close to the annual economic growth rate and is very unbearable. The current horizontal distribution is strongly weighted (82%) to the population.
The Minister also proposed, in particular environmental resilience as a new criterion by adding indicators such as forest coverage, climate adaptation investments and reforestation efforts. The recent floods at Khyber-Pakhtunkhwa are also due to the rapid narrowing of the forest area, according to climate experts.
