Islamabad:
The federal government postponed the first meeting of the National Finance Commission (NFC) at the request of the Sindh on Thursday, which asked for the adjournment due to the flood situation, while the Balutchistan technical member also bowed even before the end of the committee.
The Ministry of Finance made a notification to delay meeting hours before the Commission is planned to hold its first session in Islamabad.
“It is informed that during the reception of the Sindh government’s request, postponing the inaugural meeting of the 11th NFC due to the situation of imminent floods, the meeting of the NFC should be held on Friday (today), is postponed,” according to the secretariat of the NFC of the Ministry of Finance.
Vast parts of the country have been flooded in one of the worst floods in recent years, so far, inflicting, damage to the Northern mountains on the Punjab plains. The Sindh is ready to soon prepare flood waters.
The NFC includes nine members with the Federal Minister of Finance Muhammad Aurangzeb as president and two members of each of the provinces. But the NFC secretariat informed eight members of its decision to cancel the meeting.
He did not inform the technical member of Balutchistan Farmanullah of the decision. The Ministry of Finance said that the Balutchistan technical member apologized to join the Commission because of its other commitments.
Nasir Mahmood Khosa, former secretary and former executive director of the World Bank, is a technical member of Punjab. Sindh retained Dr. Asad Sayeed while Dr. Musharraf Rasol Cyan represents Khyber-Pakhtunkhwa. Balutchistan had called on Farmanullah as a technical member, which was excluded from the last notification of the NFC.
The President of Pakistan was the 11th NFC to decide a new formula for distributing federal taxes between the center and the provinces and between the provinces.
Under the 7th NFC allocation of 2010, the provincial share was increased by 10% to 57.5% of the total federal divisible pool without giving them additional responsibilities. This has contributed to a massive increase in public debt due to the unbearable budget deficit that the federal government has been managed since 2010.
The Minister of Finance, Senator Muhammad Aurangzeb, is the president of the commission of the nine members. The four provincial finance ministers are permanent members, while each province has the right to appoint a technical member.
Successive central governments have also retained some of the expenses to achieve their political objectives in the provinces. The Federal Board of Return (FBR) has not increased the tax / GDP ratio to 15% by 2015.
It still remains blocked at 10.2% of GDP, which is the level of 2010 despite the massive tax burden transferred to the people. The FBR also missed the LMI objective of the financial year at the last exercise to increase the tax ratio / GDP to 10.6%.
Sources have declared that the Federal Ministry of Finance and the Provincial Finance Services were to make presentations on the tax posts. The Ministry of Finance also requested the World Bank help to prepare macroeconomic projections for the next five years.
However, a recent report of the International Monetary Fund (IMF) depicts a healthy image of the economy in 2030, which weakens the case of the Ministry of Finance for the reduction of provincial actions to respond to expenses.
The projections made by the FBR and the planning commission also showed healthy trends in 2030, sources said. The planning commission has shown growth of more than 6% and a massive leap in exports and funding in the new Uraan Pakistan plan.
According to the IMF report, in 2030, the total turnover of Pakistan would increase to 16% of GDP and its expenses would be limited to only 18.8%. This represents a highly manageable budget deficit of 2.8% of GDP, showed the IMF report.
Likewise, public debt and publicly guaranteed, currently 78% of GDP, is shown by the IMF down 64% in 2030.
The sources have said that because of the accounts of narratives built by federal institutions, provincial governments are under pressure to renounce some of their actions, either in the form of income, or by choosing certain responsibilities for expenses.
One of the large ticket items is 722 billion rupees in the federal budget for the Benazir income support program, which is a provincial subject. The sources have said that federative units can assume responsibility provided they would manage the beneficiaries instead of the center.
The sources have declared that a province can oppose the notification of the NFC, which mentions certain areas which, according to her, do not fall into the NFC field.
The notification of the NFC stipulates that the Commission will discuss and decide questions relating to the sharing of financial expenses incurred or to be initiated by the Federation for the subjects and issues that come from the provinces and questions relating to the sharing of financial expenditure incurred or to be initiated by the Federation or the provinces or both with regard to transversal issues.
