The federal government has formally moved forward on long-pending fiscal reforms by notifying eight sub-committees under the 11th National Finance Commission (NFC), a step seen as critical ahead of a major reassessment of revenue sharing between the federation and provinces after more than a decade.
The notification follows a legal opinion from the attorney general, which upheld the federal government’s authority to constitute sub groups, including a sensitive panel on national debt utilisation and expense sharing. Sindh had earlier raised objections, arguing that certain expenditure matters fell outside the NFC’s constitutional scope.
The development comes amid renewed debate on provincial finances. At a recent SPDC seminar, noted economist Dr Hafiz Pasha pointed out that provinces received only 45.8% of the divisible pool in the last fiscal year, well below the constitutionally mandated 57.5%, largely due to deductions linked to petroleum levies and cash surpluses.
According to the finance ministry, the eight sub-groups will examine core issues shaping the upcoming NFC award, including the composition of the divisible pool, vertical and horizontal distribution formulas, straight transfers, tax-to-GDP improvements, the fiscal impact of the former FATA merger, expense sharing between the centre and provinces, and the structure and use of national debt. Each committee includes federal and provincial finance leadership, ensuring broad-based fiscal coordination.
The 11th NFC award, the first comprehensive review since the 7th award agreed 15 years ago, is expected to address deep-rooted disputes over fiscal responsibility, debt burden, and equitable resource allocation as Pakistan navigates economic stabilisation and structural reforms.