The President of Pakistan has formally constituted the 11th National Finance Commission (NFC) under Clause (1) of Article 160 of the Constitution. The commission has been established with immediate effect and replaces the previous commission formed in July 2020, which now stands dissolved. This move marks a significant step in redefining financial relations between the federation and the provinces at a time when fiscal coordination has become increasingly critical for the country’s economic stability.
The announcement was confirmed by Khurram Schehzad, Advisor to the Finance Minister Senator Muhammad Aurangzeb, through a post on X (formerly Twitter). He stated that the new commission would begin its functions without delay, reflecting the government’s urgency to reassess fiscal arrangements and introduce a more transparent system for the distribution of financial resources across the provinces.
The commission will be chaired by the Federal Minister for Finance, Senator Muhammad Aurangzeb, and will include the finance ministers of Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan. In addition to the provincial ministers, four experts have been nominated to represent each province. The members include Nasir Mahmood Khosa from Punjab, Dr. Asad Sayeed from Sindh, Dr. Musharraf Rasool Cyan from Khyber Pakhtunkhwa, and Farman Ullah from Balochistan. The blend of policymakers and experts is expected to provide both political representation and technical expertise in shaping recommendations.
The terms of reference for the 11th NFC are extensive. The commission has been tasked with recommending the distribution of net proceeds from federal taxes between the federation and the provinces. It will also assess grants-in-aid from the federal government to provincial governments, review the borrowing powers of both tiers of government, and determine cost-sharing mechanisms for federal expenditures on subjects that fall within provincial jurisdiction. The commission will additionally address the financial responsibilities related to trans-provincial matters and propose funding strategies for national projects undertaken jointly by the federation and the provinces. Any other financial issue referred to the NFC by the President will also come under its scope. Secretariat support for the commission will be provided by the Finance Division under the Rules of Business, 1973.
The establishment of the 11th NFC comes at a time when Pakistan is facing mounting fiscal pressures and rising demands for greater provincial autonomy. With economic challenges intensifying, the equitable distribution of resources between Islamabad and the provinces has become a matter of national importance. Economists note that effective implementation of the NFC Award is crucial for strengthening the financial capacity of provincial governments, enabling them to invest in development projects, and improving service delivery for citizens.
The commission is also expected to focus on improving transparency in the use of resources and addressing disputes that often arise over the funding of trans-provincial initiatives and national projects. The presence of seasoned experts alongside political representatives may help balance economic pragmatism with political realities. This combination is likely to shape recommendations that are not only technically sound but also politically acceptable to all stakeholders.
Observers believe that the work of the 11th NFC will play a defining role in recalibrating Pakistan’s fiscal framework. Its success will determine whether the country can strengthen cooperative federalism while ensuring macroeconomic stability. For now, the formation of the commission demonstrates the government’s recognition of the urgent need for stronger financial coordination and more equitable resource distribution in an economy struggling with revenue constraints and expenditure demands.