Pakistan’s National Finance Commission fails to act on fiscal woes
New Delhi: In what is a stark indicator of the poor governance in Pakistan, the country’s National Finance Commission (NFC) have failed to hold any meeting on revising the formula to modernise resource distribution between the federation and the provinces, according to a report in the Pakistani media.
Of the commission’s eight technical working groups tasked with driving this process, only two have met once each, while the remaining six have yet to convene since their notification in December, the report in the Karachi-based Business Recorder lamented.
Local media reports suggest that Finance Ministry officials attribute the delays to the hectic travel schedules of the Finance Minister and the Finance Secretary, while also pointing fingers at the provinces, since most groups are chaired by provincial Finance Ministers.
“Yet something as mundane as busy schedules of key federal and provincial personnel cannot excuse this standstill. Is there no mechanism for delegating at least preliminary responsibilities to junior officials, convening initial meetings, or seeking legal and technical opinions in advance? Several critical matters remain unresolved,” the report stated.
“This inertia amounts to a serious dereliction of duty. Critical decisions requiring urgent engagement — from revisiting the formula for horizontal distribution and renegotiating the vertical split between the federation and the provinces, to untangling the complex technicalities surrounding the share of the erstwhile tribal districts — were always destined to be complicated, time-consuming and potentially contentious. But complexity is not an excuse for paralysis. Failing to even begin working on these issues is unacceptable, given the NFC award’s centrality to fiscal stability, inter-governmental trust and effective governance,” it stressed.
The clearest example is the group examining the merger of former FATA into Khyber-Pakhtunkhwa, which had sought detailed workings from the federal Finance Secretary showing how increasing KP’s share to accommodate the needs of the merged districts would affect the shares of the other provinces.
Weeks later, those details are yet to arrive, preventing a second session and highlighting how even proactive efforts are stalled by federal inaction, the report pointed out.
The other group, reviewing the divisible pool of taxes under the Finance Minister, has also made little headway. Tasked with recommending additions or exclusions to the divisible tax pool, the group has made little or no progress on a crucial aspect of the NFC process, it further nod.
The centre repeatedly complains about its shrinking fiscal space and the provinces receiving the lion’s share of the NFC award, with 57.5 per cent of federal tax revenues flowing to them. That context makes the federal government’s own lethargy on this issue all the more difficult to justify, it observed.