On Saturday, Sindh Chief Minister Syed Murad Ali Shah stated that the Constitution does not permit a decrease in the provinces’ share within the National Finance Commission (NFC) award. This comes amidst reports suggesting that the International Monetary Fund (IMF) is pushing for a reevaluation of the award.
Under the 7th National Finance Commission (NFC) Award, the allocation for provinces in the vertical distribution was enhanced from 49% to 56% during 2010-11 and further to 57.5% in the subsequent years. The horizontal resource distribution among provinces shifted from a conventional population-based approach to a multi-criteria formula.
This new formula considered 82% distribution based on population, 10.3% on poverty and backwardness, 5% on revenue collection, and 2.7% on inverse population density. Lately, there have been reports suggesting that the International Monetary Fund (IMF) has urged Pakistan to revisit the NFC Award discussions, aiming to rectify the persisting disparities in fiscal resource distribution between the federal and provincial governments.
The International Monetary Fund (IMF) reportedly emphasized the importance of reevaluating the National Finance Commission (NFC) award due to disparities in resource distribution between federal and provincial authorities. During a media interaction in Karachi today, Sindh Chief Minister Shah stated that the government could not decrease the allocation to provinces in the NFC award due to IMF pressure.
He mentioned that the Constitution clearly states that the provinces’ share in resources cannot be reduced but can be increased. Shah speculated that the government might have informed the IMF about this constitutional aspect and expressed uncertainty about whether the reduction was a condition in the IMF talks, as he was not involved in those discussions.
The chief minister emphasized that, following the 18th Amendment, provinces received additional duties. Consequently, he suggested revising the NFC award to encompass these new responsibilities, rather than relying on the 7th NFC Award. He further highlighted that the PPP and Sindh government requested the federal government to introduce a new NFC award, as the previous one was no longer applicable post-18th Amendment.
Article 160 of the Constitution oversees the National Finance Commission (NFC) award. Section 3A within this article states that the provinces’ share in each NFC award must not be lower than their share in the previous award.
In July 2020, an attempt to amend this provision, which prevents reducing the provinces’ share from the previous year, faced opposition after a heated debate. The house voted with a 25-17 majority to not allow the introduction of a bill seeking to alter Article 160 (3A) of the Constitution, proposed by Barrister Muhammad Ali Saif from the Muttahida Qaumi Movement-Pakistan.
