Share under NFC Award: Govt may explore option of sharing debt servicing, power circular debt with provinces

ISLAMABAD: The federal government may explore the option of sharing debt servicing and electricity circular debt with the provinces following their refusal to revisit their share under the NFC Award.

Background interaction with officials of the finance ministry revealed that there was a general consensus that provinces should be asked to share debt servicing and electricity circular debt with the federal government after their share in the divisible pool was raised to 57.5 percent under the 2010 NFC Award.

The federal government is left with only 42.5 percent of the divisible pool with interest payments and circular energy debt no longer sustainable.

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When contacted, former state minister for finance Dr Aisha Ghaus Pasha told Business Recorder that reaching a consensus on a new formula requires agreement among all provinces and the federal government which seems highly unlikely because provinces are not ready to compromise on their share.

She said that she is familiar with the concern of the federal government over its dwindling share in the 2010 NFC Award but this can be dealt with by devolving ministries and divisions as envisaged under the 18th Constitutional Amendment of the same year.

She suggested that the federal government, instead of considering a revisit of the provinces’ share under current NFC Award, should reduce its own expenditure by rightsizing the government, pension reforms, and debt management.

Pasha said that she is an advocate of fiscal decentralization to district level for greater accountability of expenditure, adding that fiscal decentralization was envisaged under the last NFC Award but remains incomplete as resources are yet to be transferred to the district which requires political will.

Copyright Business Recorder, 2024