Marriyum Aurangzeb highlights NFC Award challenges

Urges expansion of tax base, climate vulnerability weightage

ISLAMABAD:

Senior Provincial Minister Marriyum Aurangzeb participated in the Pakistan Governance Forum in Islamabad on Friday, organised by the Federal Planning and Development Division, where she presented a comprehensive analysis of the objectives, challenges and current fiscal realities of the National Finance Commission (NFC) Award while emphasising the need to protect the rights of smaller provinces.

She stated that the NFC is the constitutional backbone of Pakistan's fiscal federalism and fundamentally a trust compact between the federation and the provinces, adding that it should operate as a true partnership between the federal government and the federating units, ensuring transparency, fairness and cooperation in all fiscal matters.

The minister noted that any future NFC framework must begin with a realistic assessment of national debt servicing obligations, defence financing requirements, climate vulnerability and water security challenges, which collectively place significant pressure on the federation's fiscal space.

She stressed that these structural pressures must be factored into any sustainable resource distribution model, and that fiscal strain at the centre cannot by default translate into fiscal compression at the provincial tier, particularly with respect to service delivery and human development infrastructure, including health, education and productivity sectors.

Highlighting mounting fiscal and data pressures, Aurangzeb underscored the importance of maintaining strong and sustainable defence spending, calling it indispensable for national security and stability. She called for a careful reassessment of defence expenditures and data-driven fiscal service financing to ensure sustainability. She stressed that the sustainability of the NFC does not mean redistributing scarcity but increasing the national revenue pie so that both the federation and the provinces benefit more equitably and sustainably. She highlighted that expanding the tax base, improving the tax-to-GDP ratio, encouraging provincial revenue generation and promoting economic growth are essential to ensuring long-term fiscal stability.