Provinces’ share in NFC Award can’t be reduced: Asad

LAHORE: The political leadership of Sindh and Balochistan has not attended the fifth meeting of the 9th National Finance Commission (NFC) and all the provinces have unanimously opposed any cut in their share, defying the federal government demand of making more than seven per cent deduction on different accounts and taking the burden of subsidies by the provinces.

The meeting was chaired by Finance Minister Asad Umar and attended by the finance ministers of Khyber Pakhtunkhwa (KP) and Punjab while the other two provinces’ finance ministers skipped it. The KP sought more time to submit the plan for utilization of extra resources after the merger of FATA with it. Earlier, it was planned that KP will submit its plan of utilization of extra resources it has been asking for to rebuild Fata.

The meeting also discussed how to increase resources allocations for the provinces in the next budget as the time is insufficient to complete and announce the 9th NFC Award before the budget 2019-20. However, the meeting stressed completing the working and announced the 9th NFC Award by December 31, 2019. The meeting decided to hold the next meeting before the end of April, 2019, which would focus on FATA and the taxation aspects of doing business.

An official who attended the meeting said that the stance of sharing the budget deficit by the provinces was also discussed on which Punjab questioned that it would not share the burden of Rs 146 billion as the Federal Board of Revenue (FBR) taxation was affected. The Punjab demand was considered, he added.

The official said the mood of the members was judged by Federal Minister Asad Umar on deduction in the share of the province with a clear and strong stance. In a media talk after the meeting, he made it clear that constitutionally, the share of provinces could not be deducted once it is decided.

Responding to questions, he claimed the meeting was held in a conducive environment and participants focused on how to improve the overall system of the country instead of taking money and increasing shares. However, the meeting was inconclusive and no major decision was made, he admitted.

He said no proposal of reducing the shares of provinces and increasing the Federation’s share was discussed. “Constitutionally, the share of the provinces could not be cut down once it is decided”, he said, adding that no reservation was made by Sindh representatives. He said there was the need to give trust to all parts of the country that the state looks after them with equality and provides the opportunity to grow.

On a question about cutting down the share of the provinces from budgetary allocations, Asad said that for the last one decade, the FBR did not achieve its revenue collection targets, so that it could not affect the provincial shares too. Further, he said in the PPP’s five-year tenure, the provinces did not get allocated resources announced in the budget. Talking about the IMF talks, the federal minister said that negotiations with the fund have started but the NFC Award has nothing to do with it. He said the country is passing through the worst crisis that was never witnessed before. So harsh actions were required that were taken by the government accordingly. As a result of these harsh decisions and actions, economy has started recovering. He claimed the current account deficit was reduced by 72 per cent in February 2019 as compared to the corresponding period of last year, from $2 billion to $395 million. He claimed the economy is coming out of crisis and now it will move towards growth.

On a question, the minister said the budget should be people-friendly. The definition of people-friendly could be different between the government and others, he said and made it clear that no new tax slab was introduced on cash withdrawal from banking transactions, instead the government ended the tax on banking transactions.

Earlier, the six sub-groups, formulated during the first meeting in February, gave presentation on various aspects of resources distribution as per terms of reference assigned to them. The main focus of all sub-groups’ deliberations was transparency, harmonization and sharing of data. The members of the commission appreciated the work done by the six sub-groups in their first meetings. It was agreed that the sub-groups would continue their deliberations and present their reports in the subsequent meetings. The chairman suggested that deliberations should also include incentives for poverty alleviation and social sector spending.

The representative of Khyber Pakhtunkhwa proposed a framework for NFC deliberations aiming at equalising fiscal resources across federating units, equal access to public services for all citizens of Pakistan and expenditure efficiency at all levels of the Federation. All members agreed on the framework submitted by the Government of Khyber Pakhtunkhwa in this regard.

Chairman Asad Umar emphasized the importance of a well-deliberated and consensus-based National Finance Commission Award and said that all federating units shared a huge responsibility in this regard. He reiterated that provincial governments will be engaged in the fiscal related discussion with the IMF.

He also suggested that each federating unit should nominate a focal person for data sharing to facilitate the working of sub-groups. He stressed strengthening the NFC Secretariat and said that necessary measures would be taken in this regard. Technical members from Sindh and Khyber Pakhtunkhwa volunteered to submit a proposal.