Provinces Alarmed by IMF’s Proposal to Cut NFC Share

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The International Monetary Fund (IMF) proposal to reduce the shares of provinces from the federal divisible pool under National Finance Commission (NFC) Award has irked all the four provincial governments, who pledged to resist the move forcefully.
Pakistan on Thursday formally approached the IMF for a bailout package to shore up its depleting foreign exchange reserves in a bid to stave off a possible balance of payment crisis in the face of widening trade deficit and swelling import bill.
On Thursday, the IMF’s managing director Christine Lagarde in a statement said that a decision on Pakistan request will be taken after more talks next week and a Fund team will travel to Islamabad for the purpose۔
The Fund during its recent annual assessment of Pakistan economy has floated the proposal to cut the shares of provinces in the NFC Award. After the government decided to opt for IMF programme, many fears the government may implement its proposal.
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The provinces have pledged to resist the move. Arab News quoted KP Finance Minister Taimor Saleem Khan Jhagra as telling the newspaper that the current distribution of resources under the NFC award was fine.  “As once the power devolution has taken place and provinces are managing their finances themselves the distribution should not be reversed,” he urged.
The NFC Award ensures financial resources are divided among the four provinces. At present, the four provinces get 57.5 per cent of the resources from the divisible pool of taxes under the seventh NFC Award distribution, whereas the federal share stands at 42.5 per cent. Among the four, the Punjab province gets the lion share at 51.74 per cent, followed by Sindh at 24.55 per cent, Khyber Pakhtunkhwa at 14.62 per cent and Balochistan at 9.09 per cent.
Sindh government has also raised concerns over the proposal. Spokesman of Sindh Chief Minister Rasheed Channa has categorically said that any move to curtail the funds would be resisted.
He said the province demands increase in its share in NFC award. The same feelings were sounded by Balochistan Finance Minister Muhammad Arif Hasni, saying we are suggesting that the government should also enhance our share by considering the factor of the area of the province other than population and poverty.
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However, Federal Government’s spokesperson on Economy and Energy Issues Dr Farrukh Saleem backed the proposal saying IMF’s aim is to consolidate federal fiscalism.
Saleem argued the proposal would be in the interest of the federation because “big expenditure including debt servicing is being incurred by the federal government”

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