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Six working groups set up during NFC session to make recommendations for new distribution formula

February 6, 2019

Six working groups have been established to prepare recommendations on a new formula for fiscal resource distribution among the federal government and other units during inaugural meeting of the 9th National Finance Commission (NFC).

Finance Minister Asad Umar chaired the newly constituted 9th NFC meeting in Islamabad on Wednesday. Provincial finance ministers and representatives attended.

Umar assured full cooperation to resolve fiscal issues between the federal and provincial governments. The federal finance secretary and provincial finance ministers/secretaries briefed the meeting about their province’s fiscal position and various related economic issues.

Sindh Chief Minister Murad Ali Shah, who also hold the finance portfolio, raised the issue of too few fund transfers to the province during the first seven months of the 2018-19 fiscal year. He said the Sindh government was deprived of Rs104 billion due to low collections.

Related: The govt is focusing on medium-term measures to fix Pakistan’s recurring issues, says Asad Umar

The federal government has assured that the funds will be transferred as tax collections will improve during the remaining five months of the ongoing fiscal year, he told the media after the meeting. The Sindh government also demanded that sales tax collection rights be given to the provinces. Similarly, the Punjab finance minister also said his province received Rs70 billion less than its share.

Umar, after detailed deliberations, formed six sub groups to put up proposals on FATA affairs, ease of doing business, macroeconomic issues and horizontal and vertical transfers of resources to the provinces. The federal and provincial governments will now share the complete fiscal data in the wake of the population census.

It was also decided that the NFC will meet every six weeks on a rotation basis. The participants also agreed that fiscal allocation should reflect true spirit of the 18th Amendment. The finance ministry, being the NFC secretariat, will play its due role for effective coordination between the federal and provincial governments.

Umar told the media that the provincial governments will be given representation in the talks on fiscal deficit issues with the IMF.

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