NFC Monitoring Committee to review debt stocks of federal, provincial govts

ISLAMABAD: The Centre and provinces have agreed to assign the NFC Monitoring Committee the task to review debt stocks of federal and provincial governments as well as overlooking the mandate of fiscal coordination committee. It also approved the establishment of the National Tax Council (NTC).

It is not yet known how the NFC Monitoring Committee would ensure its effectiveness among the Centre and provinces as it would just become a forum to present reports without having any power to enforce its directives. This NFC Monitoring Committee will be able for improving coordination among the Centre and the provinces.

According to an official announcement made by the Ministry of Finance on Thursday, the review of debt stock of the federal and provincial governments in the perspective of FRDL Act, discussion on the position of provinces’ own receipts and suggestion of measures for enhancement of provincial revenues and review of cash balances of the federal and provincial governments were also assigned to the committee.

Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh chaired the meeting of the NFC Monitoring Committee here at the Finance Division on Thursday. Provincial finance ministers of Khyber Pakhtunkhwa and Balochistan were also there while Punjab and Sindh were represented by their finance secretaries. The meeting was convened to seek approval of the bi-annual report on the implementation of the NFC Award for the periods of July-December 2018 and January-June 2019 and establishment of the National Tax Council (NTC). The reports, which were approved by the NFC monitoring committee, shall be presented in the National and provincial assemblies under the requirements of the Article 160 (3B) of the Constitution.

The bi-annual reports contain the information on Distribution of Revenues and Grants in Aid to the provinces under the NFC Award announced in 2010 (7th NFC Award). The report also contained inputs from the provinces. The reports were endorsed by the provinces.

The Bi-Annual Report of Period July-December (FY 2018-19) stated that out of FBR’s divisible pool collection of Rs1,949.752 billion, Rs1,121.207 was the provincial share. Punjab had 580.061 billion, Sindh 275.232 billion, KP 163.906 billion, Balochistan got 101.909 billion. In addition to these transfers, KP received 1% as war on terror fund of Rs19.694 billion, Balochistan additionally Rs10.149 billion and Sindh OZT grant of 7.399 billion. Straight transfers for the period were Rs.48.225 billion. In addition to the divisible pool funds, Rs19.708 bn were given to KP for WoT, Balochistan additionally received 10.079 billion and Sindh got OZT grant of 7.404 billion.

Straight transfers of Rs46.826 were also made to the provinces during the period under four heads of royalty on crude oil, royalty on natural gas, gas development surcharge and excise duty on natural gas.

During the meeting, suggestions were also presented for sales tax harmonization in Pakistan. Pursuant to the decision of CCI dated 24th November 2017, the framing of ToRs of the Fiscal Coordination Committee (FCC) was assigned to the NFC Monitoring Committee. The said ToRs were framed and approved in in Thursday’s meeting. The terms of reference state the FCC shall review and discuss the fiscal policy issues of the federal and provincial governments and suggest solutions. It will monitor the current and development expenditures of the federal and provincial governments. The discussion on issues related to FBR receipts shall also fall under the ambit of this committee. The review of debt stock of the federal and provincial governments in the perspective of FRDL Act, discussion on the position of provinces’ own receipts and suggestion of measures for enhancement of provincial revenues and the review of cash balances of the federal and provincial governments were also assigned to the committee.

The composition of National Tax Council and its proposed ToRs were also approved in the meeting.