11th NFC Talks: Key Points from Commission Meeting
ISLAMABAD: The federal government convened the latest session of the 11th National Finance Commission (NFC), bringing together provincial and federal representatives to discuss revenue-sharing formulas, fiscal responsibilities, and Pakistan’s evolving economic challenges. The meeting aimed to advance consensus on a new award framework to replace the long-standing 7th NFC Award.
Chaired by federal officials in consultation with the Ministry of Finance, the commission reviewed provincial demands, fiscal pressures, and new economic realities, signaling a possible shift toward updated distribution criteria.
Major Points Discussed
1. Revenue Sharing Formula Under Review
Member provinces proposed revisiting the vertical (federal–provincial) and horizontal (interprovincial) distribution benchmarks to ensure fairness amid reduced fiscal space.
2. Rising Federal Expenditures
The federal government stressed constraints due to:
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Debt servicing
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Defense allocations
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Pension liabilities
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Energy sector deficits
Officials warned that sustainability required a “balanced and realistic” revenue distribution model.
3. Provincial Autonomy & Expenditure Pressures
Provinces highlighted their increasing responsibilities after the 18th Amendment, including:
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Health
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Education
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Social protection
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Policing and public services
They urged a greater share of the divisible pool to meet these obligations.
4. Need for Updated Data & Transparency
The commission agreed to use updated:
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Population data
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Poverty indices
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Revenue performance indicators
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Fiscal capacity measurements
to create a more accurate basis for the next NFC Award.
5. Focus on Revenue Mobilization
Both federal and provincial members emphasized:
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Expanding the tax base
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Improving harmonized GST collection
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Curbing leakages through digital monitoring
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Strengthening coordination with the Federal Board of Revenue
6. Special Allocations for Underdeveloped Regions
Proposals were made to allocate additional funds for Balochistan, merged districts, and remote areas, aiming to uplift development indicators and reduce socio-economic disparities.
7. Agreement on Technical Working Groups
The meeting decided to form expert groups to analyze:
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Fiscal sustainability
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Population formulas
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Natural resource distribution
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Defense-linked fiscal impacts
These groups will prepare detailed recommendations for the next round of talks.
Conclusion
The 11th NFC meeting signaled progress toward reshaping Pakistan’s revenue-sharing framework, with federal and provincial governments agreeing on data-backed reforms and structured consultations. More sessions are expected in the coming weeks to finalize the contours of the next NFC Award.
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