The Pakistan Peoples Party(PPP) reiterated its stance on Tuesday regarding the National Finance Commission (NFC) Award formula, asserting it as the constitutional right of provinces and resisting any change suggested by the International Monetary Fund (IMF).
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IMF Mission Chief to Pakistan, Nathan Porter, recently highlighted concerns over the distribution of fiscal resources, urging a review of the NFC formula during discussions for a $1.1 billion loan tranche. However, PPPP spokesperson Shazia Marri emphasized the party’s position, stressing the significance of maintaining the provinces’ constitutional entitlements.
PPP’s Vice President, Senator Sherry Rehman, echoed this sentiment, questioning the IMF’s rationale in advocating for alterations to the NFC formula and emphasizing the need for equitable resource allocation.
Provincial Autonomy and Fiscal Equity
Sherry Rehman emphasized the importance of recognizing provinces’ superior performance in tax collection compared to the federal structure, urging a focus on enhancing tax revenue through the Federal Board of Revenue (FBR) rather than revising provincial shares.
Since the implementation of the 7th NFC Award in 2010, provincial shares increased significantly, reflecting a shift towards decentralization. However, fiscal imbalances persist, posing challenges for the coalition government in garnering provincial support for reforms.
Constitutional Framework and Political Dynamics
Sindh Chief Minister Syed Murad Ali Shah reiterated constitutional provisions safeguarding provincial shares in the NFC Award, underscoring the need for a new NFC award aligned with the post-18th Amendment realities.
Article 160 of the Constitution mandates that provincial shares in each NFC award should not be reduced from the previous allocation, highlighting the legal framework guiding fiscal decentralization.
As discussions on fiscal equity continue amid IMF pressure, political dynamics shape the dialogue, with parties like the PPP advocating for provincial autonomy within the constitutional framework.