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Monday, April 15, 2024

Government to reconstitute the NFC

News Analysis |

The Federal government has written letters to all the provinces on Wednesday to either confirm their existing members or make fresh nominations for non-statutory members or the reconstitution of the 9th National Finance Commission (NFC). Finance Minister Asad Umar has engaged the provinces to initiate the process of deliberations on future resource distribution.

FM informs the provinces that announcing the National Finance Award after every five years is a constitutional obligation. The Finance ministers of all the provinces and Federal finance minister are the statutory members of the NFC and it is customary for the provinces to nominate one non-statutory member from each province. It is up to the Chief Minister of each province to either continue with the exiting non-statuary members or appoint the new ones.

Former President Asif Ali Zardari is credited for the reconstitution of the much-awaited NFC in 2009. According to the Article 160(1) of the Constitution of the Islamic Republic of Pakistan, the commission consists of the Minister for Finance—who is the Chairman of the Commission and Finance ministers from all the four federating units (Punjab, Sindh, KP, and Baluchistan).

As per the Article 160 (1) of the Constitution, Government is required to kick-start the process at the intervals not exceeding the five years period. The PML-N government in its last term only conducted a couple of formal meetings of the commission instead of compulsory 10 biannual meetings. The previous regime had continued the 7th NFC award and opted to extend it, despite its expiry on June 30, 2015.

But, in August, Asad Umar had informed the Senate that the NFC Award was a constitutional obligation and on the first day after assuming office, he directed the finance secretary to initiate its process. Under the 7th NFC award, the provincial governments receive their shares from the federal government as per the following formula: Punjab 51.74%, Sindh 24.55%, KP 14.62%, and Baluchistan 9.09%.

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After the defeat of status quo parties and the emergence of new PTI governments in Punjab and Khyber Pakhtunkhwa, PTI is likely to install new members for the NFC. Though previous PML-N regime continued private member Kaiser Bengali, it remains to be seen, if the province would replace him or not. The center reconstituted 9th NFC on February 17, 2016—when Naveed Ahsan replaced Dr. Aysha Ghaus Pasha, after her appointment as the provincial finance minister of Punjab.

Former President Asif Ali Zardari is credited for the reconstitution of the much-awaited NFC in 2009. According to the Article 160(1) of the Constitution of the Islamic Republic of Pakistan, the commission consists of the Minister for Finance—who is the Chairman of the Commission and Finance ministers from all the four federating units (Punjab, Sindh, KP, and Baluchistan). Since, its evolution in 1951, it’s an important step to decentralize the country in order to improve the financial position of the provinces and also gives them considerably more autonomy.