It calls for broadening the tax base, weighting climate vulnerability and a permanent NFC secretariat at the governance forum
Chief Provincial Minister Marriyum Aurangzeb attends Pakistan Governance Forum in Islamabad. PHOTO: EXPRESS
Provincial Chief Minister Marriyum Aurangzeb on Friday participated in the Pakistan Governance Forum in Islamabad, organized by the Federal Planning and Development Division, where she presented a comprehensive analysis of the objectives, challenges and current budgetary realities of the National Finance Commission (NFC) award while emphasizing the need to protect the rights of small provinces.
She said that the NFC is the constitutional backbone of Pakistan’s fiscal federalism and basically a trust pact 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 servicing obligations, defense financing needs, climate vulnerability and water security challenges, which collectively place significant pressure on the federation’s fiscal space. She stressed that these structural pressures must be taken into account in any sustainable resource distribution model, and that fiscal tensions at the central level cannot by default translate into fiscal squeeze at the provincial level, particularly in relation to service delivery and human development infrastructure, including the health, education and productivity sectors.
Highlighting the growing pressures on public finances and data, Aurangzeb stressed the importance of maintaining robust and sustainable defense spending, calling it indispensable to national security and stability. She called for a careful reassessment of defense spending and data-driven funding of budget services to ensure sustainability without compromising critical national priorities.
Read: Of the jet and the begging bowl
She stressed that the sustainability of the NFC does not mean a redistribution of the shortage but an increase in national income so that the federation and the provinces benefit in a more equitable and sustainable manner. She stressed 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 access to citizens.
Emphasizing future preparedness, Aurangzeb called for dedicated funding streams for climate resilience, forest conservation, archeology preservation and flood rehabilitation initiatives. She proposed to institutionalize the NFC by establishing a permanent secretariat led by data science, with a systematic mechanism for reviewing and reporting on performance indicators to ensure alignment of national and provincial priorities.
She also called for a revision of the weight of population in the NFC formula and the introduction of climate vulnerability as a formal indicator to make allocations fairer and more forward-looking.
Learn more: Security tightened at shrines and mosques in Punjab
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.
Reaffirming her commitment to safeguarding the rights of small provinces, she supported the adoption of a performance-based reward and incentive model to promote fiscal responsibility, improved governance and strengthened service delivery through PPPs.
Concluding his speech, Aurangzeb emphasized that a strong, unified and sustainable NFC is essential for national cohesion, and called for a coordinated strategy on 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.
