Murad urges sticking to Constitution on NFC

Sindh Chief Minister Murad Ali Shah on Saturday said that the provinces’ share in the next NFC award would be granted as per the constitutional provisions.

“It is written in the Constitution about the NFC award that the provinces’ share [in the divisible pool/resources] cannot be reduced [but] it can be increased,” the chief minister said while speaking to the media at the Election Commission of Pakistan where he went to submit nomination papers of the Pakistan People’s Party candidates for the Senate election, being held on April 2.

When asked about the IMF’s condition to reduce the provinces’ share in the upcoming NFC Award, the chief minister said that he has heard about it too. However, he added that the federal government has reportedly informed the IMF that the matter was settled between the federal and provincial governments constitutionally and it cannot be negotiated or discussed.

The IMF on Thursday had called upon Pakistan to reopen discussions on the NFC award, seeking to address the ongoing imbalance in the distribution of fiscal resources between federal and provincial governments.

During the opening round of discussions for a $1.1 billion loan tranche, Nathan Porter, the IMF Mission Chief to Pakistan, had raised concerns over the distribution of resources and responsibilities, underscoring the need for a more equitable arrangement.

Read PPP objects to IMF’s NFC demand

Representing Pakistan in the talks was Finance Minister Muhammad Aurangzeb.

Government officials had disclosed to The Express Tribune that the IMF emphasised the need to reassess the NFC award, citing disparities in resource allocation between federal and provincial authorities.

The current formula, established in 2010, resulted in provincial shares increasing from 47.5% to 57.5% of total federal taxes, without a commensurate transfer of additional responsibilities. This has led to a sustained fiscal imbalance and a rise in public debt.

The Pakistani authorities informed the IMF that the provincial shares cannot be reduced without bringing a constitutional amendment and making all the provinces agree to a new formula.

The 2010 NFC award had been agreed for a period of five years but since then there has not been any consensus to revisit it.

The Sindh chief minister said that the 10th NFC award was announced before the passage of the 18th Constitutional Amendment. “After the 18th Amendment, the provinces have been given more responsibilities, therefore the upcoming NFC award should be made accordingly,” he said and added the federal government has its own point of view, but the issues will be discussed at the NFC forum.

He reiterated that it was the PPP and Sindh government’s demand from the federal government to bring in a new NFC award since the old no longer applied after the 18th Amendment.

Article 160 of the Constitution governs the NFC award. Section 3A of the article says: “The share of the provinces in each award of National Finance Commission shall not be less than the share given to the provinces in the previous award.”