By Staff Reporter
ISLAMABAD: Pakistan has again postponed the inaugural meeting of the newly constituted National Finance Commission (NFC), with a session previously planned for Nov. 18 now delayed indefinitely, as the government downgraded its economic growth forecast for the current fiscal year by up to 0.7 percentage points to 3.5%, Dawn newspaper reported on Monday.
The delay, the latest in a series, comes as Prime Minister Shehbaz Sharif seeks to secure political consensus on sensitive centre-province issues before opening formal talks on a new resource-sharing formula. The 11th NFC was constituted on Aug. 22 to replace the 7th NFC award that has remained in force since 2009, more than a decade beyond its constitutional five-year term. An initial meeting scheduled for Aug. 27 was first moved to Aug. 29, then postponed again at the request of the Sindh government because of severe flooding.
The provinces were informally told early this month that the inaugural session would take place on Nov. 18, but no formal notification was issued. The Prime Minister’s Office later asked that the meeting be deferred and that no new date be shared with the provinces until the premier had consulted coalition partners. Although the prime minister has no official role in NFC proceedings once the commission is constituted by the president, Sharif wanted to address key centre-province matters at the political level before technical discussions on financial rearrangements began.
The 7th NFC award gives the four provinces a combined 57.5% of the federal divisible pool tax revenue, with horizontal distribution based on population (Punjab 51.74%, Sindh 24.55%, Khyber Pakhtunkhwa 14.62%, Balochistan 9.09%), poverty, revenue collection and inverse population density. The Constitution requires any new award to be approved by consensus of the five members, the centre and the four provinces, and prohibits any reduction in the provinces’ existing share.
Repeated calls, from the finance ministry, the armed forces, and the International Monetary Fund, to rebalance the divisible pool in favour of the centre have so far gone unheeded because no new NFC award has been negotiated. The federal government has instead relied on measures outside the NFC framework. It has imposed a petroleum development levy (PDL) that is not part of the divisible pool and secured commitments from provinces to return approximately Rs1.5 trillion in cash surpluses this fiscal year. Together, the PDL and provincial surpluses are expected to yield around Rs3 trillion, equivalent to nearly 2% of GDP, for the federal government. The centre has also booked Rs2.5 billion each in the current and previous fiscal years from record-high State Bank of Pakistan profits.
The finance ministry recently informed the National Assembly that floods have caused an estimated Rs822 billion in economic losses, prompting a downward revision of FY2026 GDP growth to a range of 3.5-3.9% from an earlier 4.2% projection.
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