The upcoming meeting of the National Finance Commission (NFC) is expected to be delayed as working groups tasked with preparing key recommendations have yet to complete their assignments, according to sources cited by Business Recorder. The delay could have implications for discussions around the next NFC award, a critical framework that governs the distribution of financial resources between the federation and the provinces.
The first meeting of the NFC was held on December 4, during which it was decided that multiple working groups would be formed to deliberate on various components of the forthcoming NFC award. These groups were assigned the responsibility of examining complex fiscal and constitutional issues and presenting consolidated recommendations. A follow-up meeting of the NFC was tentatively scheduled for January 8 or January 15 to review the progress and move discussions forward.
However, sources familiar with the matter indicated that the working groups have made limited progress so far. As a result, they have been unable to finalize their preliminary reports within the proposed timeline. This has made it difficult to consolidate recommendations ahead of the next NFC session, raising the likelihood that the meeting will be postponed until the working groups complete their drafts.
The NFC plays a central role in Pakistan’s fiscal architecture, as it is responsible for building consensus on how financial resources are shared between the federal government and the provinces. The process involves detailed analysis, negotiations, and alignment with constitutional requirements. Any delay in NFC meetings can prolong discussions on the next award, which is considered crucial for both federal and provincial fiscal planning, budget formulation, and development spending.
The working groups constituted by the NFC are examining a wide range of issues. These include the composition and utilization of national debt, the sharing of financial expenditures between federal and provincial jurisdictions, the structure of divisible pool taxes, and the determination of resource-sharing percentages. Other areas under review include measures to improve Pakistan’s tax-to-GDP ratio, proposals for direct resource transfers to provinces, and the integration of the newly merged districts from the former Federally Administered Tribal Areas into the NFC framework.
One of the key areas of focus has been the merger of former FATA with Khyber Pakhtunkhwa. The first meeting of the working group on this issue was held on December 23, with the objective of formulating recommendations for inclusion in the next NFC award. Officials from the KP government reiterated their stance that the existing NFC award must be revised to meet constitutional requirements following the merger.
KP has proposed that the merged districts be treated as a separate component in future NFC awards. Under this proposal, allocations would be determined based on indicators such as population size, poverty levels, and development needs, reflecting the unique challenges faced by these areas.
The issue has also been a source of political and administrative tension. Earlier, KP Chief Minister Sohail Afridi accused the federal government of delaying development in the merged districts by failing to disburse funds under the NFC resource distribution formula for the current fiscal year. These remarks added to the ongoing debate over fiscal responsibilities and provincial entitlements.
In response, the Federal Ministry of Finance rejected the allegations, stating that KP has received its due share under the NFC, including additional allocations linked to expenditures related to the war on terror. The ministry maintained that provincial NFC shares are disbursed on a fortnightly basis and that there are no outstanding liabilities.
As working groups continue their deliberations, the timing of the next NFC meeting remains uncertain. Any further delay could extend negotiations on the next NFC award, with potential implications for fiscal coordination and resource planning across the federation and provinces.
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