A new and improved NFC Award?

With Pakistan facing yet another challenging fiscal year, the spotlight has returned on the provincial shares from the federal tax divisible pool under the National Finance Commission (NFC) award, which distributes financial resources between the federation and provinces. The prime minister has already announced his plan to convene the reconstituted NFC next month, ostensibly to address the issue of an acute vertical imbalance due to enhanced provincial share amid rising federal expenditures on debt servicing, climate resilience and infrastructure, and defence. The International Monetary Fund (IMF), too, has repeatedly, and rightly, insisted on increasing the provinces’ fiscal responsibilities in the wake of their enhanced share from the NFC arrangement for reducing the burden on the federal budget. The production of provincial cash surplus to help the centre control the consolidated fiscal deficit has been part of every recent IMF programme.