Islamabad – In a bid to reduce Pakistan’s growing fiscal deficit andmounting debt, the International Monetary Fund (IMF) has pressed thefederal government to review and amend the existing National FinanceCommission (NFC) Award. As a result, various proposals regarding theredistribution formula of national revenue between the federation andprovinces are currently under consideration.
According to sources, under the current *7th NFC Award*, provincesreceive *57.5percent of the divisible pool*. However, the federal government may requesta reduction in this share. If provinces do not agree, the government isalso exploring the possibility of introducing a change through the *27thConstitutional Amendment*.
In the proposed new formula, the *82 percent share currently allocated toprovinces based solely on population* is expected to be reduced. Instead,factors such as *lower population density, poverty levels, and taxationperformance* are likely to be incorporated to determine provincial shares.
Sources further revealed that the federal government is preparing to *transferthe Benazir Income Support Programme (BISP)* and certain *annualdevelopment projects* to the provinces, aiming to encourage provinces togenerate more revenue independently.
A recent meeting chaired by Finance Minister *Muhammad Aurangzeb* revieweddata from the 7th NFC Award, BISP funding, provincial tax contributions,and other financial indicators. The minister has directed officials toprepare a *working paper*, which will be reviewed in the next meeting.
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Although the *first meeting with provinces for the new NFC formation* wasscheduled for this month, it has been postponed and is now expected to takeplace in *September or October*. The *Khyber Pakhtunkhwa government* hasalready written to the Prime Minister, urging him to convene the NFCmeeting at the earliest.
During the *first quarter of the current fiscal year*, revenue wasdistributed to provinces under the existing NFC Award. However, due toshrinking fiscal space, the federal government may formally requestprovinces to accept a reduced quota. Final recommendations will bepresented to the Prime Minister before initiating consultations withprovincial governments.