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The International Monetary Fund (IMF) has reportedly offered technical assistance to Pakistan in drafting a new National Finance Commission (NFC) Award, proposing updates to the resource distribution formula between the federation and provinces to ensure fairer, performance-based allocations.
The NFC Award, revised roughly every five years, determines how federal revenues are shared among Pakistan’s provinces. The current formula heavily based on population share (82%) has long faced criticism for overlooking factors like education, revenue generation, and social development.
According to sources, the IMF proposal suggests incorporating additional indicators such as education, tax collection efficiency, environmental performance, and governance standards in the new NFC formula. The aim is to create a more balanced and data-driven framework for resource distribution.
The proposal also hints at reducing population weightage in favor of broader socioeconomic factors to align with evolving national priorities. Officials noted that the IMF’s support would focus on providing technical guidance and global best practices rather than dictating financial terms.
A Finance Ministry spokesperson clarified,
“No formal consultation has yet been held with the IMF on the NFC issue, but discussions on updating the formula are ongoing to ensure fiscal fairness and promote responsible governance at the provincial level.”
Sources added that an NFC Commission meeting is tentatively scheduled for November 18, where federal and provincial representatives will discuss potential revisions. Experts believe this initiative could help address long-standing disparities in development spending and revenue distribution.
Economists view the move as an opportunity for Pakistan to modernize its intergovernmental fiscal structure, ensuring that provinces contributing more to national revenue or showing better governance receive fairer shares. If executed effectively, the revised NFC Award could strengthen fiscal autonomy, accountability, and sustainable development across provinces.
