Government will hold discussions openly and listen to provinces’ position, says FinMin
The inaugural meeting of the 11th National Finance Commission concluded with all parties agreeing to include Khyber-Pakhtunkhwa’s share in the allocation of NFC after the merger of FATA and PATA in the province. A working group should be formed to examine the federal and provincial shares in the NFC price.
The 11th NFC was formed on August 22 to finalize a new price for the distribution of divisible federal resources between the center and the provinces. Its first session, scheduled for August 27, was postponed several times, first to August 29, then to November 17 and 18, for unspecified reasons and at the request of the Sindh government and the Prime Minister’s Office.
In his opening speech, Finance Minister Muhammad Aurangzeb highlighted that this meeting is an important opportunity for constitutional accountability and cooperation. He noted that the tenure of the 10th NFC Awards ended on July 21 this year, which increases the importance of today’s meeting.
According to the Finance Minister, the Federal Government was determined that the inaugural meeting of the 11th NFC would be held without delay. “The Prime Minister himself insisted that this meeting take place as soon as possible.”
Aurangzeb acknowledged that the provinces have also shown strong commitment to fulfilling this constitutional responsibility on time.
The finance minister said he would hold the discussions with an open mind and without bias, stressing that the federal government must listen to the positions of the provinces. He expressed confidence that the provinces will also move forward in a spirit of constructive cooperation.
Read: Center proposes provincial share cuts ahead of crucial NFC negotiations
Aurangzeb appreciated the provinces for signing the National Fiscal Compact, saying “this is a testament to our common resolve and ability to work together for the national interest.”
The Finance Minister emphasized that the NFC plays a crucial role in the equitable distribution of resources, fiscal stability and sustainable economic growth of the country. “Succeeding in the files related to the 11th NFC Award is our ultimate goal.”
At the end of the meeting, Financial Advisor Muzammil Aslam said, “The National Finance Commission (NFC) meeting was held in a cordial atmosphere. Major provinces have extended support to smaller provinces, which is a welcome development.”
“All parties also supported the inclusion of Khyber-Pakhtunkhwa’s share in the NFC award following the merger of FATA and PATA in the province. A task force will be formed to review the federal and provincial shares in the NFC award.”
Aslam said the task force is expected to examine other legal issues related to federal and provincial actions, with opinions to be sought from the Law Division and the Attorney General.
Sindh Chief Minister Murad Ali Shah while speaking to the media after the NFC meeting also said that the session was held in a positive environment. He added that “this was a first meeting, focused on the way forward and the programming of the next session.”
It was agreed that the Ministry of Finance would prepare a joint statement on the meeting, share it with the provinces and distribute it to the media.
Learn more: KP to participate in NFC session despite reservations: CM Afridi
Restructuring of the action
As the first meeting of the National Finance Commission concludes, the performance of the provinces takes center stage, particularly that of Khyber-Pakhtunkhwa. Planning Minister Ahsan Iqbal proposed several options to redistribute resources that would benefit the Center and smaller federating units.
Although more weight is given to variables that strengthen the fiscal position of smaller provinces, the KP share would increase by 1% to 3% in the range of 15.7% to 17.1%, as shown in the details of the proposals submitted to Prime Minister Shehbaz Sharif.
The KP government says its share is expected to increase from 6% to nearly 20% after the merger of erstwhile tribal districts.
Federal government sources said that during substantive discussions, provinces showed some willingness to share federal spending, but were not prepared to face a direct impact on their share of revenue.
“Even though the NFC Prize envisaged shared responsibility for revenue generation, provincial revenues also did not increase in line with the objectives of the NFC Prize,” according to the Ministry of Planning report.
Under the current NFC price, population dominates with a weight of 82%, but poverty, income generation and inverse population density are only of marginal importance. The Planning Ministry has proposed major changes in the formula, which would reduce Punjab’s share by around 10% and Sindh’s share as well, a reduction of half a percentage.
Read also: Kundi denies any attempt to impose governor’s rule in KP
However, KP’s share would increase to between 1% and 2.6% and that of Balochistan could reach 3%. The Islamabad Capital Territory could get up to 5% share for the first time.
KP reserves
Sohail Afridi said the federal government owes Rs1.3 trillion under the NFC while pointing out that although the erstwhile tribal districts were administratively merged with the province in 2018, their financial integration was not yet complete.
Afridi urged the federal government to consider KP’s proposals for lasting peace, warning that “decisions taken behind closed doors” negatively affect the province. He added that if the Center adopted the province’s recommendations, the KP government would take responsibility for their implementation and maintenance of law and order, stressing that all stakeholders must be included in decisions regarding peace.
Speaking outside Adiala jail, Sohail Afridi said I came here after attending the NFC meeting.
I presented KP’s position, noting that after the 25th Amendment, tribal districts were merged into the province, but they were not given their due share. I declared it unconstitutional.
In principle, the participants agreed. It was decided that a subcommittee would be formed by next Wednesday and would present its recommendations by January 8. The next NFC meeting will take place in January.
The people of KP have made immense sacrifices in the fight against terrorism and our infrastructure has suffered serious damage. Unfortunately, we have not received our share.
It was disappointing to see today that the people of KP were being denied what is rightfully theirs, while three other provinces were being accommodated. However, we were assured that our rights would be respected.
Since our government took office in 2018, two NFC meetings have taken place. After the regime change operation in 2022, these meetings could not continue. We hope that the people of KP will now get their due share.
The NFC meeting, originally scheduled for 11:00 a.m. to 11:15 a.m., continued until 12:40 p.m.
