Key Takeaways
- Muhammad Aurangzeb, Finance Minister, calls for review of the National Finance Commission (NFC) Award’s population criterion.
- Current formula assigns 82% weight to population, which is deemed unsustainable by the minister.
- Aurangzeb highlights population growth and climate change as critical issues for Pakistan.
Finance Minister Muhammad Aurangzeb has called for a review of the National Finance Commission (NFC) Award’s population-based resource distribution formula, arguing that the current 82% weight assigned to population is 'not sustainable'. Speaking at an event on Wednesday, he stated that whenever the NFC discussion moves forward in terms of horizontal matrices, this formula will have to be reviewed.
The NFC Award is a constitutional body responsible for distributing tax revenue between federal and provincial governments, and then among provinces. The 7th NFC Award adopted a multi-factor formula, reducing population’s weight from 100% to 82%, while incorporating factors like poverty levels (10.3%), revenue generation (5%), and inverse population density (2.7%).
Aurangzeb termed population growth and climate change as 'existential issues' for Pakistan, emphasizing that addressing these challenges is crucial for the country's future potential. He stated, 'If we don’t address these two existential issues, then in terms of the potential of Pakistan by the time we get to be 100 years old, we are not going to get there.'
While acknowledging that immediate steps through the federal budget—such as removing the sales tax on contraceptives—are necessary tactical measures, Aurangzeb stressed that deeper structural reforms would be required for lasting results. He added, 'As I mentioned, these are tactical measures,' and highlighted the need for measurable targets and regular monitoring in implementing the National Population Council’s agenda.
Regarding financing population-related initiatives, the finance minister stated that resources would be available beyond the annual federal budget through the World Bank's 10-year Country Partnership Framework. He noted that roughly $600 million to $700 million per year is available for these interventions.
Aurangzeb’s call for a review of the population criterion comes amidst ongoing debates and calls for a new NFC award to address evolving fiscal needs and imbalances in resource distribution among provinces.
The minister's remarks underscore the significance of demographic challenges in shaping Pakistan’s future economic landscape, highlighting the need for comprehensive reforms beyond immediate budgetary measures.
So whenever we move this NFC discussion forward in terms of horizontal matrices, this formula will have to be looked at and reviewed.
Muhammad Aurangzeb, Finance Minister
If we don’t address these two existential issues, then in terms of the potential of Pakistan by the time we get to be 100 years old, we are not going to get there.
Muhammad Aurangzeb, Finance Minister
