ISLAMABAD – Pakistan Peoples Party (PPP) and Pakistan Muslim League-Nawaz (PML-N) have reportedly developed a consensus on a new fiscal arrangement aimed at easing financial pressure on the federal government without making changes to the National Finance Commission (NFC) Award or the Benazir Income Support Programme (BISP).
The sources said that the leaders of both parties agreed that the existing NFC Award formula governing revenue distribution between the federation and provinces, as well as the structure of BISP, will remain unchanged.
The understanding is said to be part of broader efforts to address the Centre’s fiscal challenges while maintaining the current framework for provincial resource allocation and social welfare support.
Under the proposed arrangement, provinces are expected to contribute significant financial resources to assist the federal government, although the exact mechanism is yet to be finalized by technical experts.
Sources said the agreement reflects a compromise designed to strengthen the federal government’s fiscal position without reopening the NFC Award, a politically sensitive issue that has long been a subject of debate between the Centre and the provinces.
The discussions reportedly took place amid consultations over the federal budget for the 2026-27 fiscal year. Deliberations on resource-sharing and social protection programmes were among the key issues considered during negotiations between the coalition partners.
For some time, concerns have been raised in policy circles regarding the fiscal balance between the federation and the provinces following the 18th Constitutional Amendment. Advocates of revisiting the NFC Award argue that the federal government requires greater financial space to meet its obligations, while provinces, particularly Sindh, have consistently opposed any reduction in their constitutional share of revenues.
Similarly, suggestions regarding the transfer of BISP-related responsibilities to provincial governments have surfaced in recent years. However, PPP has maintained that the programme should continue to operate under its existing framework due to its importance as a nationwide social safety net.
Sources indicated that rather than reducing provincial shares directly, the proposed fiscal adjustment may involve alternative measures, including restructuring expenditure priorities, revising funding arrangements for selected development projects, and redefining certain financial responsibilities between the federation and provinces.
Officials familiar with the talks said PPP emphasized the political and public importance of both the NFC Award and BISP, insisting that any fiscal reforms should be pursued without affecting either arrangement. The party also stressed the need to preserve BISP’s funding and outreach to vulnerable segments of society.
Meanwhile, PML-N representatives are said to have highlighted the need for greater provincial support in addressing the country’s economic challenges, arguing that coordinated efforts between the federation and provinces are essential to ensure fiscal stability and improve governance outcomes.
The final contours of the proposed arrangement are expected to emerge after further consultations and recommendations from the relevant committees.
