Federal Government Forms 11th National Finance Commission for New NFC Award
Islamabad: The federal government has officially constituted the 11th National Finance Commission (NFC) to formulate a new NFC Award for the distribution of national resources among provinces. The Federal Finance Minister has been appointed as the Chairman of the newly formed 9-member commission.
According to a notification issued by the Ministry of Finance, the President of Pakistan approved the formation of the 11th NFC under Article 160(1) of the Constitution. This move also nullifies the previous NFC notification issued on July 21, 2020, rendering the earlier commission dissolved.
The commission includes the finance ministers of Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan, along with four nominated members: Nasir Mahmood Khosa (Punjab), Dr. Asad Saeed (Sindh), Dr. Musharraf Rasool Cyan (KP), and Farmanullah (Balochistan). The Finance Division will provide secretariat support to the commission.
As per Article 160(2), the commission’s mandate includes:
* Distribution of net tax revenues between the federation and provinces
* Grants-in-aid from the federal government
* Borrowing powers of the federation and provinces
* Sharing of expenditures in provincial domains
* Inter-provincial expenditure allocation
* Joint financial responsibilities for national-level projects
* Recommendations on other financial matters referred by the President
**Provinces Oppose Proposal to Reduce NFC Share**
Sources revealed that provinces have been demanding a new NFC Award for several years, as the current distribution is still based on the outdated award. The federal government is now working on a revised plan, reportedly under pressure from the International Monetary Fund (IMF), which has called for significant reductions in government expenditures.
One of the controversial proposals includes reducing the provinces’ share in the NFC Award, currently set at 57.5%. This has been met with strong objections, particularly from Sindh, which has already rejected the idea.
Additionally, the new award may introduce performance-based allocations, linking provincial shares to outcomes in education, health, and environmental sectors. There is also a proposal to allocate dedicated funds for Gilgit-Baltistan and Azad Kashmir, and to lower the population weightage from 82% to a smaller proportion.
**Focus on Debt Repayment and Deficit Reduction**
According to the Ministry of Finance, the federal government faced a budget deficit of Rs. 7.44 trillion in the previous fiscal year, with the current year’s deficit estimated at Rs. 6.5 trillion. The goal of the new NFC framework is to reduce debt servicing burdens and overall fiscal imbalance. Interest payments alone are expected to reach Rs. 8.2 trillion this year.
The new NFC will review these proposals and formulate recommendations in consultation with all stakeholders. A consensus-based new NFC Award will be announced once the review is complete.
