The International Monetary Fund on Thursday called upon Pakistan to reopen discussions on the National Finance Commission award, seeking to address the ongoing imbalance in the distribution of fiscal resources between federal and provincial governments.
During the opening round of discussions for a $1.1 billion loan tranche, Nathan Porter, the IMF Mission Chief to Pakistan, raised concerns over the distribution of resources and responsibilities, underscoring the need for a more equitable arrangement. Representing Pakistan in these talks was Finance Minister Muhammad Aurangzeb.
Government officials disclosed that the IMF emphasised the need to reassess the NFC award, citing disparities in resource allocation between federal and provincial authorities.
The Pakistani authorities informed the IMF that the provincial shares cannot be reduced without bringing a constitutional amendment and making all the provinces agree to a new formula.
The 2010 NFC award had been agreed for a period of five years but since then there has not been any consensus to revisit it.
Addressing the challenge of garnering provincial support for reforms, particularly within a politically diverse landscape, presents a formidable task for the coalition government.
The IMF also raised the issue of excessive spending by the provincial governments, which can undermine this fiscal year’s primary surplus target of Rs400 billion.
