In the first consultative meeting of the 10th National Finance Commission Award, six working groups have been formed from which one group will coordinate to create understanding and consensus between federal and provincial governments.
Federal Minister for Finance and Revenue, Dr Abdul Hafeez Shaikh, chaired the inaugural meeting of the 10th National Finance Commission (NFC) on Thursday at the finance division. Chief Minister Sindh Syed Murad Ali Shah, Finance Minister Punjab Makhdoom Hashim Jawan Bakht, Finance Minister KP Taimur Saleem Khan Jhagra, Finance Minister Balochistan Zahoor Ahmed Buledi and non-ex-officio members including Tariq Bajwa (Punjab), Musharaf Rasul Cyan (KP), Dr Kasier Bengali (Balochistan), Dr Asad Sayeed (Sindh) and senior officials of the Ministry of Finance/ Finance Departments of the provinces participated in the meeting.
Speaking on the occasion, the Finance Minister stated that NFC has been mandated by the constitution to recommend, to the president, amicable distribution of financial resources between the federation and the provinces of the net proceeds of taxes. NFC is a forum to develop harmony between the federal government and the provinces and to work out a sustainable resource sharing formula with mutual consensus, he added.
The Federal Secretary finance outlined the Terms of Reference (TORs) of the NFC and the main tasks before the NFC which include the development of a sustainable macroeconomic framework for the 10th NFC Award, vertical revenue sharing, selection of indicators for horizontal distribution formula, simplification of taxes to facilitate businesses and bringing erstwhile FATA at par with the rest of the country.
During the deliberations, members of the commission highlighted emergent financial issues, including the need to increase the size of the pie for everyone, the rising burden of pension payments and the need for closer coordination between federal and provincial revenue collecting agencies. The participants discussed the need for harmonization of revenue collection operations at respective levels of the federal and provincial governments to broaden fiscal space and streamline revenue collection.
The meeting formulated seven sub-groups with specific tasks on the basis of TORs of the commission with the direction to present recommendations before the august forum in due course of time.
The Finance Minister called upon all the members to do their best to come up with focused and workable recommendations to make the 10th NFC Award successful.
The Finance Minister, prior to the meeting while talking to media, said that reaching staff level agreement with IMF is a very positive development and it could boost the confidence of international financial institutions which will increase their investment in Pakistan.
Sindh Chief Minister Murad Ali Shah on this occasion said that the provinces want to finalize the 10th NFC Award as soon as possible. He stated that on account of the delay, the Sindh government is facing scarcity of funds and is now finding it difficult to pay salaries of employees. He added that to pay running expenditures, the provincial government is using its development funds which is not good for economy. Moreover, the provinces do not agree on TORs and they seek more time to deliberate and review them. As per the constitution, he stated, the share of provinces ‘has to increase’, adding that the tax collection by the federal government increased by just six percent whereas in Sindh it increased by 14 percent.
Balochistan’s Finance Minister Zahoor Ahmed Buledi said that during the meeting every province has been given a task to work on the 10th NFC Award. After the seventh NFC Award, his province spent Rs 250 billion to counter insurgency and to improve the law and order situation. According to him, Balochistan is the least developed province of the country and in order to address the sense of deprivation among the people of the province, more funds should be allocated.
Finance Minister Khyber Pakhtunkhwa Taimor Saleem Jhagra stated that following the merger of tribal areas in Khyber Pakhtunkhua, huge funds were needed to improve the infrastructure of tribal areas which have already been destroyed during the war against terror.