ISLAMABAD: The centre has decided to continue with 7th National Finance Commission (NFC) award on centre-provincial revenue sharing for another year. The five-year constitutional term of the arrangement had expired on June 30, 2015.

A senior government official told Dawn that it was practically impossible to have a new resources sharing arrangement before next year as federal and provincial budgets are due in about a month.

He said Finance Minister Ishaq Dar would be out of the country until next week, attending annual meetings of the Asian Development Bank and pre-budget talks with the International Monetary Fund. “All budgetary exercises for budget 2016-17 are almost complete and based on the 2009 NFC award,” he said.

Responding to a question, the official said the government will need to formally extend the five-year award to the 7th year because of a binding clause in the presidential order of last year. Under that order, the government had extended “the existing award for another year or till conclusion of the next award, whichever is earlier”. A finance ministry official blamed the provincial governments for the second extension to 2009 award saying the new NFC was to be based on a series of studies assigned to the provinces. “They have not done their job,” he said.

New resources sharing formula not possible before the next fiscal year

An official said the Sindh’s private member on NFC Saleem Mandviwalla was currently coordinating with all the provincial finance ministers to impress upon Ishaq Dar to immediately call a meeting of the NFC after he was informed unofficially that new award was not possible for the next year budget. He was not available for comment.

Balochistan’s private member Dr Kaiser Bengali confirmed that a new NFC was no more possible before the next fiscal year’s budget. “Nothing can be done at this stage. The existing one has to go on. Unfortunately, NFC does not appear to be federal government’s priority,” he said. “They are not even holding usual quarterly meetings of the NFC, which are mandatory”.

He deplored that the National Finance Commission (NFC) was completed six months ago but they have been delaying its meeting. “If they are not interested to change the old arrangement they should extend the award till the end of constitutional term of the government,” he said.

Responding to a question regarding inability of the provinces to complete sectoral studies for NFC, Dr Bengali said the studies had nothing to do with the NFC award. He said while he had declined to do sectoral study at the very outset because it was useless, even three other provinces had submitted the studies to the centre.

An official from Khyber Pakhtunkhwa said the centre was least interested in a new NFC award as long as the provinces were offering cash surpluses to the centre. He said it was a conditionality of the IMF that provinces should not spend their revenue shares to finance federal government’s fiscal deficit. The NFC had become incomplete after Punjab’s private member Dr Aysha Ghous Pasha was promoted to the rank of provincial finance minister early last year and the provincial government took more than five months to nominate her replacement. In February this year, the 9th NFC was reconstituted with appointment of Naveed Ahsan, former secretary finance and chairman National Accountability Bureau, as Punjab’s non-statutory member.

A finance ministry official confirmed that NFC had not met for more than a year. Its last meeting was held in April 2015, he said. He said it was an established norm that the existing financial arrangement had to be in place till a new one was announced and notified.

Published in Dawn, May 3rd , 2016