NATIONAL NEWS
ISLAMABAD: Pakistan is preparing for a major revision of the National Finance Commission (NFC) Award, the mechanism that outlines how financial resources are shared between the federation and the provinces. According to sources in the Finance Ministry, the International Monetary Fund (IMF) has expressed willingness to provide technical assistance for the exercise.
Officials say work has begun on crafting a fresh formula, although formal consultations with the IMF on the matter have not yet taken place. “It’s premature to predict what the final arrangement will look like,” one official noted, stressing that the new structure will be developed with a long-term national perspective in mind.
The current NFC formula has been in place for more than ten years, and officials argue that demographic and economic shifts across the country necessitate an update. A meeting of the NFC Commission has been tentatively scheduled for November 18, where members are expected to hold detailed discussions on the proposed changes.
Among the ideas being evaluated is a reduction in the population share, which currently carries an 82 percent weight in the award. Instead, the federal government is considering the inclusion of new indicators such as:
Education and literacy outcomes
Health sector performance
Provincial tax collection
Environmental and development benchmarks
Officials believe such adjustments would encourage good governance and reward provinces that demonstrate stronger fiscal discipline and social-sector performance.
The revised formula is expected to calculate allocations using an updated population figure of 241.5 million, in line with the latest national estimates. Another element under review is the clarification of fiscal authority between the centre and provinces, with the aim of improving autonomy and ensuring better accountability.
Sources indicate that the government wants the new NFC Award to move toward a performance-based model, creating incentives for sustainable development and responsible financial management.
The Finance Ministry has emphasized that no changes will be finalized without extensive consultation with all provincial stakeholders. Officials say the ultimate objective is to establish a formula that supports balanced development and strengthens national cohesion.
As one senior official put it, the upcoming NFC Award is expected to do more than allocate funds—it will shape the future framework of Pakistan’s economic management and cooperative federalism.
