Federal Budget Delay Reportedly Linked to Dispute Over Tax Revenue Distribution Between Centre and Provinces
Islamabad: The delay in the upcoming federal budget has reportedly surfaced due to a dispute between the federal government and provinces over the distribution of resources from the divisible tax pool, according to official sources.
Sources said that differences have emerged regarding the National Finance Commission (NFC) framework, as the federal government is seeking a larger share of resources from the divisible pool, while the provinces are unwilling to accept any reduction in their existing shares.
According to details, the federal government has reportedly demanded an additional Rs 1,200 billion from the provinces. However, the provinces have rejected any reduction in their constitutional share, leading to further negotiations on the issue.
Officials said the federal government maintains that the additional funds would be utilized for defence, national security, and relief-related expenditures.
The matter was reportedly discussed in a recent meeting between President Asif Ali Zardari and the Prime Minister, with some progress also being made in talks involving the federal negotiation team and Khyber Pakhtunkhwa Chief Minister Sohail Afridi.
Finance Ministry sources said that efforts are underway to reach a consensus soon, after which the federal budget for the next fiscal year is expected to be presented on June 12.
Sources further said that various working groups have been formed for a new NFC award, and multiple meetings have already taken place. However, no final agreement has yet been reached, as any change to the NFC award requires either legislation or mutual consent of all provinces.
According to details, the federal government is currently seeking to allocate around Rs 8,200 billion to provinces in the next fiscal year, while under the existing formula, the provincial share stands at approximately Rs 9,400 billion.
It is also reported that the federal government has requested provinces to forgo additional shares, including Rs 650 billion from Punjab, Rs 300 billion from Sindh, Rs 180 billion from Khyber Pakhtunkhwa, and Rs 110 billion from Balochistan. Meanwhile, Sindh’s development budget is said to have been increased from Rs 50 billion to Rs 62 billion as part of ongoing discussions.
