Latest news with #NFC)Award
Express Tribune
5 days ago
- Business
- Express Tribune
PFC Award controversy leaves governance in limbo
Every couple of years, the Sindh government complains to the federal government that it is not receiving its due share of funds under the National Finance Commission (NFC) Award. However, the provincial government itself behaves no differently when it comes to allocating funds to its own local government bodies. Just as the NFC Award governs the distribution of financial resources from the federation to the provinces, the Provincial Finance Commission (PFC) Award is meant to ensure the fair distribution of financial resources among local bodies within a province. While Sindh complains about the federal government's failure to implement the NFC Award, local bodies across the province, including the Karachi Metropolitan Corporation (KMC), have long-standing grievances against the Sindh government regarding the non-implementation of the PFC Award. According to the Constitution, the federal government must announce a new NFC Award every five years, and similarly, provinces are constitutionally bound to issue a new PFC Award every five years to ensure proper financial distribution among local governments. In Sindh, however, the last NFC Award was announced in December 2009 and came into effect in July 2010. Its term ended in June 2015, but no new award has been issued since. Similarly, the last PFC Award was issued in 2002, and it expired in 2007. Nearly 17 years have passed since the last award expired. Despite this, the Sindh government has yet to announce a new PFC Award, and funds are still being distributed based on the outdated award, creating mounting financial pressures on local bodies. KMC, the province's largest municipal institution, is also facing serious financial challenges due to the delay in the new PFC Award. In its latest budget documents, KMC has specifically highlighted this issue, formally requesting the Sindh government to issue a new PFC Award without further delay. According to KMC's recent budget report, it contributes towards 60 per cent of the octroi tax revenue generated in Sindh but does not receive its share accordingly. Its expenditure, on the other hand, continues to rise. For instance, in the 2023-24 fiscal year, KMC required Rs28.93 billion for non-salary expenses but received only Rs17.98 billion from the Sindh government, leaving a deficit of over Rs11.19 billion for this category alone. While the provincial government fails to allocate the required funds to KMC, it continues to increase the salaries of government employees every year, adding to the corporation's financial burden. Official figures show that while KMC's revenue from octroi taxes has increased by 95 per cent over the past few years, its expenditure on salaries and pensions has gone up by 255 per cent. Naseer Memon, a political economist, opined that the PFC Award was a genuine issue across all provinces. "The provinces force the federal government to devolve powers to the provinces but are not in favour of transferring those powers to the local governments, which are at the foundation of a democratic system. There should be a fair criterion for the distribution of resources through the PFC Award. Unlike the NFC formula where population is the major criteria for distribution of resources, the PFC should have multiple criteria for distribution among local governments including resource collection and backwardness," suggested Memon. On the other hand, Dr Kaiser Bengali, a renowned economist, revealed that the Provincial Finance Commission still did not have constitutional protection. "Until this issue is resolved, the PFC award controversy will continue. Just as the Constitution clearly mentions the functions and powers of the federation and the provinces, it is also necessary to include the functions and financial matters of the local government separately," noted Dr Bengali. When The Express Tribune reached out to Sukkur Mayor and Sindh government spokesperson Arsalan Islam Shaikh regarding the delay in the new PFC Award, he stated that Sindh had been severely affected by natural disasters like COVID-19 and floods over the past several years, which has delayed the announcement of the new PFC Award. "Issuing a PFC Award is a constitutional obligation and it will be finalized soon," assured Shaikh.
Business Recorder
6 days ago
- Business
- Business Recorder
Decentralization deferred: The unfulfilled promise of 18th Amendment and local governance
In 2010, Pakistan passed the landmark 18th Constitutional Amendment, a legislative milestone that was widely hailed as a turning point in the country's journey toward democratic deepening and decentralization. The amendment was envisioned as a transformative measure one that would transfer legislative, administrative, and fiscal authority from the federal center to the provinces, and eventually, to local governments. It promised greater autonomy, more accountable governance, and enhanced service delivery at the grassroots. Fifteen years on, however, the vision remains unrealized. Instead of embedding a functional three-tier governance system, the amendment has revealed persistent structural and political barriers that continue to undermine genuine devolution. Passed alongside the 18th Amendment, the 7th National Finance Commission (NFC) Award represented a critical fiscal realignment. It increased the share of provinces in federal divisible resources from 49 percent to 57.5 percent and adopted a new formula for resource distribution: 82 percent based on population, 10.3 percent on poverty and backwardness, 5 percent on revenue generation, and 2.7 percent on inverse population density. While this was a progressive step at the time, recognizing disparities among provinces and aiming to rebalance federalism, it inadvertently entrenched a number of limitations. One major issue is the weak incentive for provinces to improve tax collection. With only 5 percent weight assigned to revenue generation, provincial governments find little fiscal reward in undertaking the politically sensitive and administratively burdensome task of expanding their tax base. Simultaneously, the federal government faces growing fiscal deficits due to heavy debt servicing, defense spending, and subsidies, leaving limited space for growth-oriented investments. This results in a structural deadlock: provinces are underfunded and unmotivated, while the center remains overstretched and unwilling to relinquish financial control. The stasis is further compounded by the fact that the NFC Award has not been revised since 2010. While originally envisioned as a mechanism for dynamic fiscal redistribution reflecting evolving developmental needs, the 7th NFC has remained frozen in time. The absence of an updated award means that provincial disparities persist, provincial service delivery remains constrained, and critical expenditures aligned with devolved responsibilities are routinely underfinanced. What worsens this situation is the lack of a functioning fiscal mechanism at the local level. Although the spirit of the 18th Amendment and Article 140-A is to ensure a flow of power from the federal to the provincial to the local tier, the last step in this chain, the empowerment of elected local governments, has been neglected. Article 140-A of the Constitution obligates provinces to establish systems of local government and devolve political, administrative, and fiscal responsibilities to elected representatives. The rationale is clear: local governments are best positioned to address immediate community concerns, including solid waste management, drinking water, education infrastructure, and local roads. They form the interface between the state and citizens. Yet, in practice, local government institutions have been rendered ceremonial. Despite the constitutional amendment in 2010, provinces took several years to hold local elections: Balochistan in 2015, Punjab in the same year, Khyber Pakhtunkhwa in 2015 (and again in 2021), and Sindh only in late 2021. Even where elections were held, they were often delayed, disrupted, or diluted through legislative amendments and administrative interference. The scope and depth of devolution across provinces also remain inconsistent. In Punjab, despite enacting local government legislation, real authority continues to rest with the provincial bureaucracy, and the elected tier has been frequently dissolved or sidelined. In contrast, Khyber Pakhtunkhwa adopted a comparatively more ambitious model, introducing village and neighborhood councils to promote citizen participation. However, systemic underfunding and limited decision-making powers have curtailed their effectiveness. Across all provinces, delays in local elections, lack of clarity in roles, and provincial reluctance to share financial authority have constrained the functionality of local governance structures. These institutional shortcomings are not accidental; they reflect underlying political dynamics. Strong and empowered local governments can become centers of alternative political power, threatening the patronage networks and control mechanisms of provincial elites. For instance, the provincial government in Punjab has repeatedly postponed local government elections, citing legislative amendments and procedural concerns. The Election Commission of Pakistan has often been left in limbo, unable to proceed due to pending provincial revisions in local government laws. This problem is rooted in the very design of Article 140-A, which grants provinces significant leeway in defining and modifying local government systems, enabling manipulation and delay without consequence. While the 18th Amendment was rightly celebrated as a step toward democratization, its implementation reveals a glaring mismatch between constitutional intent and political practice. The need for a revised NFC Award is now critical. A new formula should reduce the excessive dependence on population as the primary criterion and instead incorporate dynamic indicators like tax effort measuring the actual effort of provinces to raise revenues relative to their capacity. Increasing the weight of tax effort from the current 5 percent to at least 10 percent would incentivize provinces to mobilize their own resources, reducing their reliance on federal transfers and encouraging greater fiscal responsibility. Equally, it is imperative to restore and strengthen local governments by shielding them from provincial encroachment. The Council of Common Interests (CCI) can serve as a neutral platform for reviewing and standardizing the design of local government frameworks across provinces. Reforms should include fixed electoral cycles, protected tenures, independent fiscal allocations, and the authority to retain and utilize locally generated revenues. These funds can be channeled into improving service delivery in vital sectors such as health, sanitation, and education. More importantly, legal, and institutional guarantees must be established to protect the autonomy and decision-making authority of elected local bodies, ensuring that they are not undermined by political expediency. None of these problems is novel. Economists, civil society organizations, parliamentary committees, and government task forces have repeatedly identified the structural gaps in Pakistan's decentralization framework. The problem lies not in diagnosis, but in the absence of political will to implement reform. Pakistan's governance remains trapped in a cycle where governments prioritize short-term political survival over long-term institutional strengthening. Until this mindset changes, the 18th Amendment will remain an incomplete promise, its transformational potential hindered by administrative inertia and political resistance. Decentralization is not merely a constitutional provision; it is a governance imperative. For Pakistan to truly benefit from the framework laid out in the 18th Amendment, it must move beyond symbolic commitments and toward systemic reform. A re-imagined NFC Award, empowered local governments, and genuine intergovernmental coordination are necessary steps to fulfill the democratic potential embedded in the Constitution. Without these, the foundational vision of a responsive, accountable, and citizen-oriented state will remain elusive. Syeda Dua Raza, Abdullah Khalid, Saad Ali Ahmed (The writers are associated with the Sustainable Development Policy Institute, Islamabad (SDPI) as research Interns. The article does not necessarily represent the views of the organisation) Copyright Business Recorder, 2025
Express Tribune
17-07-2025
- Politics
- Express Tribune
ANP sounds alarm over autonomy threat
The Awami National Party (ANP) has announced the convening of a National Jirga in Peshawar on July 26 to address the deteriorating law and order situation, rising incidents of terrorism and target killings, and the party's opposition to the proposed 26th Constitutional Amendment. Speaking at a press conference at Bacha Khan Markaz following a meeting of the party's provincial cabinet, ANP Khyber-Pakhtunkhwa President Mian Iftikhar Hussain said that elders from all walks of life, particularly those from the merged tribal districts, would be invited to the Jirga. He warned that the delay in the National Finance Commission (NFC) Award, attempts to seize control of natural resources, and efforts to roll back the 18th and 25th Constitutional Amendments are all part of a larger conspiracy to undermine provincial autonomy. "This land belongs to our forefathers, and as citizens of this country, we have every right to demand control over our resourceseven if some don't like it," said Mian Iftikhar. He added that new laws aimed at controlling mineral wealth, revival of the tribal Jirga system, and attacks on the 18th Amendment are deliberate efforts to push the tribal areas back into underdevelopment. Calling for justice, he demanded the formation of a judicial commission headed by a Supreme Court judge to investigate the assassination of Maulana Khanzeb, with representation from the martyr's family in the commission. "No one has been arrested so far. If facts are withheld or manipulated, the ANP will expose the truth to the public," he warned. Mian Iftikhar said the National Jirga would formulate a strategy on how to effectively raise these issues at the national level. He stressed that ANP's struggle is not personal, but a fight for peace, ideology, and sovereignty. "We have sacrificed over 1,200 lives. Our workers were targeted, and still, we remained silent. But now, we will not stay silent anymore," he asserted. Calling for political unity, he said it is time for all parties to come togethernot for votes or power, but for the future of coming generations.
Business Recorder
11-07-2025
- Business
- Business Recorder
Population growth, climate change: Aurangzeb identifies ‘critical' existential challenges facing Pakistan
ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb said on Thursday that sustainable economic growth — aimed at realising the vision of Pakistan becoming a $3 trillion economy by 2047 — would remain elusive unless the country squarely addresses two critical existential challenges: climate change and population growth. This, he stated while addressing an event organised by the Ministry of National Health Services, Regulations and Coordination to mark World Population Day. Aurangzeb also supported the call for population to be recognised as a core allocation criterion in the National Finance Commission (NFC) Award. He said that the existing resource-sharing formula needed to evolve to reflect new realities, especially those concerning population and climate-related pressures. Finance minister urges population as key criterion in NFC Award formula The minister agreed with the views expressed by the health and planning ministers, advocating for the inclusion of broader human development indices to guide equitable resource distribution between the federation and provinces. The finance minister underscored that under the leadership of Prime Minister Shehbaz Sharif, the government is pursuing a broad-based reform agenda covering key areas such as taxation, energy, state-owned enterprises, and privatisation. The minister emphasised the need to address the two existential issues of population and climate change to ensure sustainable economic growth. Talking about the 2.55 percent growth rate of population, Aurangzeb said that it has alarming implications for national development, economic planning, and social well-being. Citing the fact that 40 percent of children under five in Pakistan suffer from stunted growth, he warned that the country's future leadership is already at risk. He stressed that addressing stunting and learning poverty requires an integrated, end-to-end approach, encompassing nutrition, sanitation, clean drinking water, birth spacing, and greater awareness—all of which were discussed by scholars and experts at the event. The minister also highlighted the importance of empowering women, who constitute half the country's population, noting that inclusive workforce participation is essential for Pakistan's sustainable development. He reiterated the need to tackle learning poverty, especially among girls, and to invest meaningfully in education and skills development to enable women to contribute productively to the economy. He emphasised the need for a paradigm shift in national budgeting. Rather than compartmentalising federal and provincial finances, he proposed a unified, country-level approach to development spending. Citing this year's development budget of Rs1 trillion at the federal level and Rs4.2 trillion when including provinces, he noted that the real challenge is not the availability of funds but their optimal allocation and prioritisation. Aurangzeb also called for a reorientation of donor engagement and development financing. He remarked that while infrastructure had been the primary recipient of international funding in the past, it is now imperative to direct those resources toward human capital development, particularly in health, education, and population planning. He referenced Pakistan's 10-year Country Partnership Framework with the World Bank, noting that four out of its six pillars focus on population and climate-related issues. He informed the gathering that one-third of the total funding—amounting to nearly $20 billion over a decade, or around $600–700 million annually—will be dedicated to population-related measures. He urged that such resources must be strategically deployed, moving beyond symbolic steps like tax relief on contraceptives, and instead ensuring impactful investments across the board. The minister reaffirmed the government's commitment to prioritising long-term, sustainable solutions to Pakistan's population challenges and leveraging both domestic and international resources to build a healthier, more productive nation. He urged policymakers and development partners to go beyond traditional infrastructure investments and prioritise human capital development. 'We have built roads and power projects, but it's time to invest in people,' he said. 'This is the only way to ensure real, inclusive, and sustainable progress.' The event was attended by Federal Minister for National Health Services Syed Mustafa Kamal, Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal, Minister for Parliamentary Affairs Dr Tariq Fazal Chaudhry, as well as prominent religious scholars, members of civil society, and senior government officials. Copyright Business Recorder, 2025
Business Recorder
10-07-2025
- Business
- Business Recorder
Population growth, climate change: Aurangzeb identifies ‘critical' existential challenges facing country
ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb said on Thursday that sustainable economic growth — aimed at realising the vision of Pakistan becoming a $3 trillion economy by 2047 — would remain elusive unless the country squarely addresses two critical existential challenges: climate change and population growth. This, he stated while addressing an event organised by the Ministry of National Health Services, Regulations and Coordination to mark World Population Day. Aurangzeb also supported the call for population to be recognised as a core allocation criterion in the National Finance Commission (NFC) Award. He said that the existing resource-sharing formula needed to evolve to reflect new realities, especially those concerning population and climate-related pressures. Finance minister urges population as key criterion in NFC Award formula The minister agreed with the views expressed by the health and planning ministers, advocating for the inclusion of broader human development indices to guide equitable resource distribution between the federation and provinces. The finance minister underscored that under the leadership of Prime Minister Shehbaz Sharif, the government is pursuing a broad-based reform agenda covering key areas such as taxation, energy, state-owned enterprises, and privatisation. The minister emphasised the need to address the two existential issues of population and climate change to ensure sustainable economic growth. Talking about the 2.55 percent growth rate of population, Aurangzeb said that it has alarming implications for national development, economic planning, and social well-being. Citing the fact that 40 percent of children under five in Pakistan suffer from stunted growth, he warned that the country's future leadership is already at risk. He stressed that addressing stunting and learning poverty requires an integrated, end-to-end approach, encompassing nutrition, sanitation, clean drinking water, birth spacing, and greater awareness—all of which were discussed by scholars and experts at the event. The minister also highlighted the importance of empowering women, who constitute half the country's population, noting that inclusive workforce participation is essential for Pakistan's sustainable development. He reiterated the need to tackle learning poverty, especially among girls, and to invest meaningfully in education and skills development to enable women to contribute productively to the economy. He emphasised the need for a paradigm shift in national budgeting. Rather than compartmentalising federal and provincial finances, he proposed a unified, country-level approach to development spending. Citing this year's development budget of Rs1 trillion at the federal level and Rs4.2 trillion when including provinces, he noted that the real challenge is not the availability of funds but their optimal allocation and prioritisation. Aurangzeb also called for a reorientation of donor engagement and development financing. He remarked that while infrastructure had been the primary recipient of international funding in the past, it is now imperative to direct those resources toward human capital development, particularly in health, education, and population planning. He referenced Pakistan's 10-year Country Partnership Framework with the World Bank, noting that four out of its six pillars focus on population and climate-related issues. He informed the gathering that one-third of the total funding—amounting to nearly $20 billion over a decade, or around $600–700 million annually—will be dedicated to population-related measures. He urged that such resources must be strategically deployed, moving beyond symbolic steps like tax relief on contraceptives, and instead ensuring impactful investments across the board. The minister reaffirmed the government's commitment to prioritising long-term, sustainable solutions to Pakistan's population challenges and leveraging both domestic and international resources to build a healthier, more productive nation. He urged policymakers and development partners to go beyond traditional infrastructure investments and prioritise human capital development. 'We have built roads and power projects, but it's time to invest in people,' he said. 'This is the only way to ensure real, inclusive, and sustainable progress.' The event was attended by Federal Minister for National Health Services Syed Mustafa Kamal, Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal, Minister for Parliamentary Affairs Dr Tariq Fazal Chaudhry, as well as prominent religious scholars, members of civil society, and senior government officials. Copyright Business Recorder, 2025
