Finance Ministry asks provinces to reconstitute much-delayed NFC Award

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ISLAMABAD: As the provinces are yet to respond to the letters sent by Finance Minister Asad Umar last month, the Ministry of Finance has again written to the provinces with regard to the nomination of members to reconstitute the much-delayed 9th National Finance Commission (NFC) Award.

According to sources, the letter was sent by the Finance Ministry secretary to remind all provincial chiefs to nominate their members or approve the names of existing members to reconstitute the NFC award.

It is pertinent to mention that the federal and provincial finance ministers are statutory members of the NFC while one non-statutory member from each province is nominated by the chief minister of the respective province.

“The second letter is sent by the secretary as a reminder of the previous one,” said an official at the ministry, adding that in case the provinces started the nomination process, it might still take more than a month as the nomination is finally approved by the governors of the provinces.

The letter stated that the NFC Award is required to be set up at intervals not exceeding five years, as required under the clause (1) of Article 160 of the Constitution. The Finance Ministry asked the provinces to either reconfirm the earlier nominated members or intimate the change in the nomination to enable the federal government to notify the NFC and start deliberations of the commission.

The 9th NFC Award has been in a deadlock since July 1, 2015. The NFC is a constitutional body formed every five years. It is tasked to determine the respective share of the federation and provinces in the specified federal tax reverence.

Although the approval of next NFC Award is a challenge for the incumbent government owing to lack of resources and other technical and legal hindrances, it is still willing to at least do the exercise, said a source privy to this development.

“In case the three provinces agree to relax the conditions for the next award, Sindh would definitely object the move, making the entire process a futile exercise,” he added.

As per the Article 160 (3) (a), the share of the provinces in each award of National Finance Commission shall not be less than the share given to the provinces in the previous Award. Since the government lack required resources to give even equal to previous awards, the agreement of all provinces is difficult.

The previous federal government had also wanted an upfront share of 7 per cent from the divisible pool to meet security and development expenditures of then FATA, Gilgit-Baltistan and Azad Kashmir, but the provinces did not accept it.

Article 160 of the Constitution stipulates that the members of the NFC award include the federal finance minister, the provincial finance ministers, “and such other persons as may be appointed by the president after consultation with the governors of the province.”

When all members are agreed, the resulting recommendations are on-sent to the president who as per the constitution “shall, by order, specify, in accordance with the recommendations of the commission.”