Key points
- Commission comprises provincial finance ministers as ex officio members
- Revised nomination from Balochistan govt completes updated composition
ISLAMABAD: Pakistan President Asif Ali Zardari has approved a change in the composition of the 11th National Finance Commission (NFC) after the government of the Balochistan province revised its nomination for a non-ex officio member.
The NFC, a constitutional body established under Article 160, is mandated to recommend the distribution of federally collected taxes between the Centre and the provinces, as well as among the provinces themselves.
It also addresses related fiscal matters such as grants-in-aid, provincial borrowing powers, and cost-sharing of national projects.
The province has now recommended Mahfooz Ali Khan, replacing the earlier nominee, while the president’s assent has formalised the change.
The development comes days after the formal constitution of the 11th NFC on August 22, which was notified by the Ministry of Finance with Federal Finance Minister Muhammad Aurangzeb as chairperson.
Composition
The commission comprises provincial finance ministers as ex officio members, and one technical member from each province.
With the president’s approval, the revised nomination from Balochistan completes the updated composition.
The constitution of the 11th NFC has revived debate on a long-delayed reform process. The 7th NFC Award of 2009, which significantly enhanced the provincial share of the divisible pool to 57.5 per cent, remains in effect more than 15 years later, despite its intended five-year term.
Consensus on new formula
Successive governments have struggled to reach a consensus on a new formula, with the Centre citing growing fiscal pressures while provinces defend their allocations.
Discussions within the new commission are expected to focus on revising the horizontal distribution formula, which currently allocates around 82 per cent weightage to population.
Several provinces, particularly Khyber Pakhtunkhwa and Balochistan, have pushed for the inclusion of new criteria such as forestation, climate resilience, and development disparities, while others warn of the political sensitivities involved in reducing population weightage. Federal officials have also signalled the need to revisit the overall provincial share in light of budgetary constraints.
Reconstitution of commission
The reconstitution of the commission, with Balochistan’s fresh nomination now endorsed by the President, sets the stage for what is expected to be a contentious but critical round of fiscal negotiations between the Centre and the provinces.
