PESHAWAR: Disagreement between the provinces and the Centre over distribution of resources and sharing revenues to finance massive infrastructure and socio-economic development plans in the country’s tribal regions could potentially derail the yet-to-be-approved Fata reforms, senior officials warn.

The officials say that while Sartaj Aziz, who heads the Fata reforms committee, continues to lobby for early approval by the cabinet of his 80-page report, some senior figures in the federal capital believe that without working out a financial package, the whole endeavour might come to nought.

“This is by far the best and most comprehensive reforms package that we have seen but the reforms need to be backed up by financial commitment. Without it, I am afraid the reforms would go nowhere,” a senior government official said.

“The committee report may end up gathering dust with other reform recommendations made over the decades,” the official remarked. “Cabinet approval of the reform recommendations is not an issue. Arranging finances to fund the massive undertaking is.”

Mr Aziz’s reforms package is due to go to the cabinet for approval when it meets next, but a debate has begun between the Centre and the four provinces and even within the federal government on its financial fallout and “who would foot the bill”, as one source put it.

Provinces reluctant to accept a four per cent cut from divisible pool

Mr Aziz, who is Adviser to the Prime Minister on Foreign Affairs, insists on the federal cabinet’s approval first before worrying about arranging the finances for the reforms package.

“Let the federal cabinet stamp its approval first,” he told Dawn on telephone. “The money part can be taken care of later. We have to prepare the plan and work out the cost estimates and that may take some time,” the adviser said.

“There is no justification for delaying its approval on the basis of first working out the financial arrangement,” he argued.

But some federal government officials say that a financial commitment has to come first. A proposal is already doing the rounds in federal corridors, suggesting the provinces agree to a four per cent cut from their divisible pool, to provide 2pc to Fata and 1pc each to Gilgit-Baltistan and Azad Kashmir.

The two per cent to Fata, the officials say, would be in addition to its current Annual Development Programme funded by the federal government.

The proposed 2pc share to Fata comes roughly to about Rs60 billion. Fata’s current ADP for 2016-17 stands at Rs18.2bn. “This is a huge amount and can turn around Fata and speed up its merger with KP,” one official noted.

The only issue — and this is a major issue — is that none of the four provinces agree to any further cuts to their shares.

The federal government had had to make a hasty retreat when the issue was presented before the Council of Common Interests and when it was brought before the National Finance Commission (NFC) at its last meeting; it was shown as an item-x agenda. The provinces complained that they were neither informed about it nor given time to prepare for it.

Officials familiar with the mood among the federating units say that they were unlikely to approve any proposal seeking further reduction in their pool to finance what essentially are federal subjects and federal entities, when the NFC meets again next week or so.

A federal government official was optimistic that Punjab and Balochistan could be brought around to agree to the formula. His argument was that Khyber Pakhtunkhwa should look at it as an investment in an area that would eventually merge with it and, therefore, the PTI-led coalition government needed to go out and make Sindh agree to it.

The provinces are already up in arms against the Centre’s proposal to seek 3pc allocation for security of the China-Pakistan Economic Corridor (CPEC) and 1pc each for climate change and sustainable development goals from the provinces’ share of the divisible pool.

“That’s five per cent and if it is saying that the provinces foot the bill for Fata, Gilgit-Baltistan and AJ&K, this would bring the total deductibles to nine per cent. Fata, Gilgit-Baltistan and AJ&K are federal government entities, why should the provinces pay for them,” asked one government official.

KP Chief Minister Pervez Khattak concurs. He said his province was already short of resources and subjecting it to further cuts would create more problems. Already, he added, the federal government had deducted at source money for the census as well as for subsidising fertilisers despite written objections by his government.

“There is a huge distrust between the Centre and the provinces,” a senior government official said. Unable to meet its own financial needs, he added, the Centre was trying to encroach on the provinces and in the process undoing the 18th amendment as well as take away the hard-won shares of the provinces in the NFC award.

The provinces suspect that if they were to agree to reduction in their shares from the divisible pool, this would open the door for the federal government to seek further reduction.

“Had this been just about Fata, we would have discussed it but what have we got to do with Gilgit-Baltistan and AJ&K. Those are for the federal government to take care of,” the official argued.

So far, Mr Khattak says, he has been adamant that Islamabad, rather than the provinces, should foot the bill for Fata reforms.

But a senior government official said it might be willing to discuss the proposal if (a) Fata was delinked from Gilgit-Baltistan and AJ&K, (b) the federal government too coughed up resources instead of placing the entire burden on the provinces and (c) a commitment on Fata’s merger with KP. “Let the federal government put its cards on the table and share details,” the official said.

“Let them first say what their plans are and we shall see what we can do. But at the moment, I am not seeing this happening in the next NFC meeting,” the official added.

Published in Dawn January 14th, 2017