Miftah Ismail calls for revising NFC award

ISLAMABAD: Former finance minister Miftah Ismail on Monday asserted that any attempts at economic reforms will be futile unless the National Finance Commission (NFC) award, the allocation of revenues between the Centre and the provinces, is revised, ARY News reported.

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.”

The traditional population-based criteria for the horizontal distribution of resources amongst the provinces was changed to a multiple-criteria formula. According to this criteria, 82pc distribution was made on population, 10.3pc on poverty and backwardness, 5pc revenue collection/generation, and 2.7pc on inverse population density.

Recently, reports circulated that IMF had asked 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.

Speaking at ARY News programme ‘Khabar’, the former minister said that the Centre suffered a fiscal crisis by providing funds to the provinces – a crisis according to him led to the current wave of inflation, causing hardships for the common man.

Terming NFC award ‘root cause’ of country’s financial troubles, Miftah Ismail emphasised the urgent need for revising it, warning that failure to do so will have severe consequences for the country’s economic progress.

Ismail lamented the lack of a clear mandate for the government to review the NFC Awards, stressing that state forces must take an active role in driving change.

He also expressed optimism that state forces are aware of the need for revising the award and are willing to work towards a solution.

Recently, Finance Minister Muhammad Aurangzeb also hinted at reviewing National Finance Commission (NFC) award once International Monetary Fund (IMF) approves the new loan programme.

Speaking to a Turkish news outlet, finance minister Muhammad Aurangzeb – who is in the US capital with his team to participate in the IMF and World Bank’s meetings – noted that Pakistan needs to review it in the context of 18th amendment where a lot of stuff has been devolved to the provinces.

“It is a discussion which we will have with the provinces… in terms of either expenditure sharing or requesting them to incentivise to bring up the tax base, because the reality is, after the 18th amendment and the NFC award, some of the sectors which need to be brought in a much bigger way into the tax net are actually provincial markets,” he said.