ISLAMABAD: The federal government has decided to form the 11th National Finance Commission (NFC) to finalize a new formula for resource distribution among the provinces.
The announcement follows the disclosure by the finance ministry on Tuesday that it spent Rs638 billion on provincial matters, including health, education, and social protection, despite these subjects being constitutionally devolved to the provinces.
The Rs638 billion spent by the federal government in the four provinces, Islamabad, and special areas does not include development spending, highlighting that a substantial portion of federal funds continue to flow into provincial subjects without legal obligation.
The finance ministry’s report, published ahead of the formation of the new NFC, includes details of federal spending in areas devolved under the 18th Amendment of 2010, which transferred several subjects to the provinces, thereby decentralizing power.
In the last fiscal year, Rs638 billion was spent in the provinces on health, education, and social protection, Rs36 billion more than the previous year. The report also revealed that social protection initiatives accounted for Rs466 billion, including Rs350 billion distributed across the provinces under the Benazir Income Support Program (BISP).
The finance ministry’s report noted that the federal government also spent Rs45 billion on health-related initiatives, including Rs21.3 billion for the Expanded Program on Immunization (EPI). Additionally, Rs114 billion was allocated for education, with significant funds directed toward higher education via the Higher Education Commission (HEC).
Meanwhile, during the April 28 meeting of the Council of Common Interests, the federal government informed the provinces that the 11th NFC would be constituted to finalize the 8th award. Nominations for technical members have been sought from the provinces, and Sindh has nominated Dr. Asad Sayeed as its technical member.
The 10th NFC term will conclude on July 23, 2025, without finalizing the 8th award, which expired in 2015. The President of Pakistan has been extending the last consensus award on an ad-hoc basis each year.
The Khyber Pakhtunkhwa government has called for the 10th NFC meeting to announce an interim award before the new budget is finalized, specifically addressing the net hydel profit and merged districts.
The finance ministry’s report highlights how the federal government’s expenditure continues to exceed the legal framework under the 7th NFC award, which allocated 57.5% of resources to the provinces. These ongoing federal expenditures, particularly on devolved matters, have raised concerns about the financial autonomy of the provinces.
