Centre and provinces: With three months left, proposal moved to constitute NFC

Matter had been pending as Sindh delayed nomination of its member.

ISLAMABAD: Prime Minister Nawaz Sharif has proposed to the president to constitute the 9th National Finance Commission (NFC), aimed at working out a mechanism to distribute resources between the federal government and the provinces for the next five years.

The commission has been proposed just three months before the expiry of the existing award, which will end on June 30 this year. The matter was pending as Sindh government was deliberating on the name of its technical member on the NFC.

The proposal was moved by the Ministry of Finance after it received nomination of Sindh’s technical member for the NFC, according to a handout issued by the Ministry of Finance on Tuesday.  The government of Sindh has nominated Saleem Mandviwala as its member. Mandviwalla has served as a chairman for Board of Investment before he was appointed finance minister during the last few months of the Pakistan Peoples Party government.



Federal Minister for Finance Ishaq Dar sent the proposal to President Mamnoon Hussain through Sharif for the constitution of the 9th NFC, said the ministry. According to the provisions of Article 160 of the constitution, the president shall constitute a NFC consisting of the federal finance minister, provincial finance ministers, while others may be appointed by the president after consultation with provincial governors.

The federal finance minister will be the chairman of the nine-member NFC, which will comprise of four provincial finance ministers and four technical members, one each from the four federating units.

The other three provinces had already nominated their respective technical members couple of months back. Punjab has nominated Dr Ayesha Ghous Pasha, wife of former finance Minister Dr Hafiz Pasha.

Khyber Pakhtunkhwa has nominated professor former senator Mohammad Ibrahim Khan. Balochistan has nominated Dr Qaisar Bangali, who is currently serving as an aide to Balochistan’s chief minister. In the 8th NFC, Dr Bengali had represented Sindh.

The government said that the first meeting of the commission will be held as soon as its constitution is approved by the president. However, no meaningful discussion is expected in the first meeting, as the chances are that the four provinces and the centre may unanimously recommend the president to extend the duration of the present award for one more year, said a nominated member of the commission.

He said the new commission does not have sufficient time to deliberate on issues besides all the finance ministers would be occupied with budget-making for the next fiscal year.

The president has powers to issue an interim order, extending the existing NFC Award until commission achieves consensus on the new award. The federation will try to win back some of the concessions that it had given to the provinces under this award.

However, the new commission cannot reduce provincial shares below 57.5% of the net federal tax receipts, as it has been guaranteed in the constitution. But the centre will try to shift some of its expenditures onto the provinces.

In the first half of the last year of the award, the federal government transferred Rs729 billion to the provinces from July through December, about Rs46 billion less than the budgeted amount. The NFC award guarantees provinces’ share at 57.5% of net federal tax receipts. But Balochistan’s annual share has been guaranteed irrespective of tax collection by the Federal Board of Revenue.

In total, the federal government has budgeted transferring Rs1.720 trillion to the provinces during fiscal year 2015, ending on June 30, both as part of their share in federal revenues and straight transfers.

Published in The Express Tribune, April 1^st,  2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.