ISLAMABAD - The government has called the first meeting of reconstituted 9th National Finance Commission (NFC) on 6th February in Islamabad for discussion on strategy for the new NFC award—new resources distribution formula between centre and provinces.

The NFC’s meeting will be chaired by Finance Minister Asad Umar and the four provincial finance ministers and four non-statutory members would attend it. “The meeting will receive briefing on fiscal position by provinces as well as federal government. The meeting will also have general discussion on strategy for deliberations over new NFC award,” said a brief handout released by the ministry of finance.

President Dr Arif Alvi had recently reconstituted the 9th NFC to work out a new resources distribution formula between the Centre and federating units. The Ministry of Finance had notified the new 10-member Commission. Finance Minister Asad Umar will chair the NFC, which will comprise the four provincial finance ministers and their respective technical members, according to the notification.  The Centre had also included the federal finance secretary as the tenth member as the official expert.

The reconstituted 9th NFC would be required to give 8th NFC award for five years. The 7th NFC award expired in June 2015. The PML-N government had extended the previous 7th award for consecutive three years. Under the 7th NFC Award, the federal govt is bound to transfer 57.5 per cent resources to all the four provinces from federal divisible pool. Under the current award, Punjab gets 51.74pc share, Sindh 24.55pc, Khyber Pakhtunkhwa 14.62 per cent and Balochistan 9.09pc under the divisible pool. In the budget for current fiscal year, the federal government would transfer Rs2590 billion to the four provinces under NFC award that is 11.82 percent more than the share of previous year. Out of the total revenue of the federal government, Punjab stands to get Rs1.28 trillion, Sindh would receive Rs648 billion, Khyber Pakhtunkhwa would gain Rs426.6 billion (including one percent to compensate for the war on terror), and Balochistan would be allocated Rs233 billion.

The previous government of PML-N had held few meetings on 8th NFC award. However the federal government and provinces reached on a deadlock over a proposal of centre for cutting down the overall size of the federal divisible pool by seven percent to the provinces, allocating three percent for the National Security Fund (NSF) and four percent for Gilgit-Baltistan, Fata and AJK. The International Monetary Fund (IMF) had also asked Pakistan to slash provincial share under the NFC to restrict the increasing budget deficit.

Economist also believed that federal and provincial governments should remove the flaws in NFC award to control the soaring budget deficit of the country. Under the 7th NFC award, the federal government has to transfer 57.5 percent of federal taxes to the four provinces. The federal government has to meet the expenditures of debt servicing, defence, development, pensions, salaries and others through remaining 42.5 percent of the taxes. Ultimately, the federal government had to borrow to meet the deficit, which goes out of control.