While talking to delegations from International Non-Governmental Organizations (INGOs) and overseas Pakistanis, Minister for Finance, Khyber Pakhtunkhwa (KPK), Muzaffar Saeed stated that the delay in the 9th National Finance Commission (NFC) award is becoming a major hurdle for the provincial government in acquiring soft loans from International Financial Institutions (IFIs) as well as bilaterals. The reason: donors assess the financing needs of a province based on revenue expectations and it is the NFC award that determines each province’s revenue share from the divisible pool which is the major source of provincial revenue – in the case of KPK up to 90 percent. Saeed accused the federal government of showing utter disregard to the constitutional lapse and the financial hardships of small federating units.
The Sindh government too has repeatedly urged the federal government to announce the NFC award before the next budget is announced. Senator Saleem Mandviwalla, a non-statuary member of Sindh for the NFC, has revealed that the Sindh government would propose the restoration of the federal excise duty on crude oil, and collection of sales tax on goods and royalty on oil and gas to be given to provinces.
The 2010 NFC award was signed after sustained efforts of Shaukat Tarin who held the Finance portfolio at the time and Chief Minister of Punjab, Shahbaz Sharif, who, at a cost to Punjab, agreed, as per the current year’s budget documents, to “multiple indicators for distribution of provincial shares in the divisible pool whereas in all the previous awards, population remained the sole criterion for distribution of provincial shares in the divisible pool with special grants (subventions) to smaller provinces.” Article 160 (3A) of the Constitution stipulates that “the share of the provinces in each award of the National Finance Commission shall not be less than the share given to the provinces in the previous award” and it is this very stipulation that, all are agreed, is the basis for the delay in the ninth NFC award as all provinces, including Punjab, are expected to seek an addition to their percentage share from the last award while credible reports indicate that the incumbent Federal Finance Minister Ishaq Dar is unwilling to further increase provincial share of the NFC award vis-a-vis the federal government.
The 9th NFC award as per the 2016-17 budget documents “was constituted on April 4, 2015 and its first meeting was held on 28th April 2015. NFC, in its first meeting, constituted four working groups to undertake thematic studies and put forth their recommendations for consideration by the commission; as soon as working groups complete their studies and submit their recommendations, the next meeting of the NFC will be convened. The present award will remain operative till 9th NFC announces next Award.” There is no mention of any time line being given to these working groups to complete their studies and submit their recommendations and, disturbingly, 21 months after they were set up, there is little indication as to how much of these studies have been completed. Inexplicably Ishaq Dar, who appears to be the preferred candidate for all negotiations with members of the opposition, friendly or otherwise, as well as with coalition partners has shown himself unable or unwilling to successfully negotiate the 9th NFC award – a subject that most concerns him as the Minister for Finance.
During the 2016 calendar year, the Federal Finance Minister repeatedly assured the provinces that the 9th NFC award would be announced before the end of the ongoing fiscal year. However, there are serious concerns by the smaller provinces that the Centre is simply not interested in the 9th award till after the general elections.
