ISLAMABAD: Finance Minister Muhammad Aurangzeb pledged an open-minded approach to negotiations on sharing federal tax revenues with provinces, kicking off the first meeting of the 11th National Finance Commission amid strains from floods, security threats and IMF-mandated reforms.
“We are here today with an open mind and without any prejudice,” Aurangzeb said in opening remarks at the meeting in Islamabad on Thursday, according to a finance ministry statement. “Our first priority is to listen to each other.”
The gathering marks the formal start of talks to replace the 10th NFC Award, which expired in July, leaving the cash-strapped South Asian nation in a fiscal limbo as it grapples with high inflation, mounting debt and commitments under a $7 billion International Monetary Fund bailout. Provinces, which rely on federal transfers for much of their budgets, have pushed for a bigger slice to cover devolved responsibilities like health, education and policing.
Aurangzeb, chairing the session at the Finance Division, stressed the need for “sincere and transparent” dialogue to address speculation and concerns. He noted the forum’s role under Article 160 of the constitution in ensuring equitable resource distribution, fiscal stability and sustainable growth. “In this context, the importance of this meeting increases further,” he said, adding that Prime Minister Shehbaz Sharif had prioritised convening it promptly.
Provinces had shown similar resolve, Aurangzeb said, though floods in Punjab, Khyber Pakhtunkhwa and Sindh forced delays. The minister highlighted recent challenges, including the May conflict with India and devastating floods, saying the nation had “stood united as a strong federation” and urging the same spirit for NFC deliberations.
He praised provinces for signing the National Fiscal Pact and delivering required surpluses to support the IMF program. “It is a testament to our shared commitment and ability to work together in the national interest.”
The meeting agreed to form five to six working groups on various subjects, with the next session slated for between Jan. 7 and 15. Sindh Chief Minister Murad Ali Shah, speaking to reporters afterward, described the atmosphere as cordial, with both sides outlining their fiscal positions. “Discussions will be held regarding this and, God willing, they will be formed next week,” he said of the groups.
Khyber Pakhtunkhwa Chief Minister Sohail Afridi said his delegation presented the province’s case, focusing on the 2018 merger of federally administered tribal areas, or Fata, into KP. Funds have been distributed among “three and a half provinces” since then, with tribal areas shortchanged, he alleged. “We raised the point that this was unconstitutional,” Afridi told the media. “After putting forward the stance, all participants agreed with this in principle.” He added that the issue would be pursued further in mid-January.
Ahead of the talks, Afridi consulted senior leaders from his Pakistan Tehreek-e-Insaf party, including Asad Qaiser and Finance Adviser Muzammil Aslam. A provincial government post on X detailed briefings on Fata’s entitlement to Rs1,375 billion, with Rs531.9 billion still pending after an initial promise of Rs100 billion annually post-merger. Afridi called the delay a “violation of Article 160” and vowed to safeguard KP’s rights.
The NFC, reconstituted on Aug. 22 after repeated postponements from an initial Aug. 27 date, must allocate net proceeds from taxes on income, capital value, corporations, sales of goods and services, and customs duties. Provinces cannot receive less than their prior share, per the constitution, making each award a high-stakes balancing act. Members include the four provincial finance ministers and non-statutory experts: Dr. Asad Sayeed from Sindh, Mehfooz Ali Khan from Balochistan, Nasir Mehmood Khosa from Punjab and Dr. Musharraf Rasool Cyan from Khyber Pakhtunkhwa.
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