President Zardari Establishes 11th NFC to Redefine Fiscal Allocation
In a decisive move to revamp Pakistan’s fiscal structure, President Asif Ali Zardari has constituted the 11th National Finance Commission (NFC), aiming to realign federal resource distribution among the Centre and the four provinces. The announcement came on Friday via a notification from the Finance Division, signaling the start of a long-overdue restructuring of the federal divisible pool.
Finance Minister Muhammad Aurangzeb will chair the newly constituted commission, alongside the four provincial finance ministers. This initiative marks a critical step forward in Pakistan’s financial governance, especially after the expiration of the 10th NFC and the continued application of the 7th NFC Award, which has remained in place since 2010.
Who’s Who in the 11th NFC?
Key Members Representing Provinces and Expertise
The 11th NFC is composed of a blend of seasoned bureaucrats and independent experts. The members include:
| Member | Role | Representing |
|---|---|---|
| Muhammad Aurangzeb | Chairman | Federal Finance Minister |
| Nasir Mahmood Khosa | Member | Punjab (Former Bureaucrat) |
| Asad Sayeed | Member | Sindh (Economist & Researcher) |
| Dr. Musharraf Rasool Cyan | Member | Khyber Pakhtunkhwa (Former Bureaucrat) |
| Farmanullah | Member | Balochistan (Finance Expert) |
This diverse mix is expected to bring both technical knowledge and practical governance experience to the table, fostering consensus in future recommendations.
What is the Role of the 11th NFC?
The 11th NFC has been tasked with submitting recommendations to the president on a range of critical fiscal matters under Article 160(3) of the Constitution. These include the distribution of net proceeds of major federal taxes such as:
- Income taxes, excluding those from the Federal Consolidated Fund
- Sales and purchase taxes on goods (imported/exported, produced, or consumed)
- Export duties, particularly on cotton and other items designated by the president
- Excise duties and any other taxes specified by the president
Broader Fiscal Scope and National Projects
The commission’s mandate extends beyond mere tax revenue distribution. It is also authorized to advise the president on:
- Grants-in-aid to provinces from the federal government
- Borrowing powers exercised by federal and provincial governments
- Cost-sharing for trans-provincial and national infrastructure projects
- Financial mechanisms for provincial domain issues funded by the Centre
- Any other finance-related matters delegated by the president
These expanded responsibilities reflect the Centre’s recognition of emerging financial challenges that require coordinated intergovernmental responses.
Historical Deadlock and Need for Reform
A 15-Year-Old Award Still Governing Modern Finances
Despite being designed for a five-year cycle, the 7th NFC Award—formulated in 2009—has remained in effect for nearly 15 years, continually extended due to unresolved disputes between the Centre and provinces. The 10th NFC expired on July 21, leaving a policy vacuum amid rising financial pressures on the federal government.
The impasse largely stems from diverging provincial and federal priorities over how to share revenues, especially amid economic instability and fiscal deficits.
Impact of the 18th Amendment on Revenue Sharing
The 18th Constitutional Amendment has fortified the fiscal autonomy of provinces. It ensures that no future award can reduce a province’s share below what it received in the previous award. While this protection has safeguarded provincial interests, it has also restricted the federal government’s room to maneuver during financial stress.
This has led to repeated calls from finance ministry officials and federal policymakers to revisit the revenue-sharing formula for a more sustainable federal budget outlook.
Previous NFC Awards at a Glance
Here’s a brief look at how past NFC Awards have shaped federal-provincial fiscal ties:
| NFC Award | Year | Key Highlights |
|---|---|---|
| 7th NFC | 2009 | Increased provincial share from 47.5% to 56% |
| 8th NFC | N/A | No consensus reached |
| 9th NFC | N/A | Failed to deliver final award |
| 10th NFC | 2015–2020 | Expired without a new award |
| 11th NFC | 2025 | In progress |
Source: Finance Division, Government of Pakistan
What’s Next for Pakistan’s Fiscal Future?
The 11th NFC holds the promise of creating a more transparent, equitable, and growth-oriented fiscal roadmap. Analysts argue that only a collaborative, depoliticized effort can deliver meaningful change. Key takeaways will include:
- Rebalancing of federal and provincial priorities
- Data-driven distribution formulas
- Commitment to national project funding without provincial exclusion
- Transparent governance and independent oversight
Conclusion: Towards Fiscal Equity and Sustainability
As Pakistan prepares to implement the 11th NFC, the outcome will be pivotal for both fiscal stability and inter-provincial harmony. The commission’s ability to mediate competing interests and formulate a fair, forward-looking award will define its legacy in Pakistan’s economic history.
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