NFC Award formula: Aurangzeb hints at reviewing population-based distribution

ISLAMABAD: Finance Minister Muhammad Aurangzeb on Wednesday hinted at reviewing the National Finance Commission (NFC) Award’s population-based resource distribution formula, arguing that the prevailing mechanism, which assigns 82 percent weight to population, is no longer sustainable and must be revisited as part of broader structural reforms.

Addressing a World Population Day seminar, the minister said Pakistan could not achieve its long-term economic potential unless it tackled what he described as two “existential challenges” — rapid population growth and climate change.

“There are also more structural issues, such as the NFC, where population accounts for 82 percent of the allocation formula.

That is simply not sustainable,” Aurangzeb said.

“Whenever we move the NFC discussion forward in terms of the horizontal allocation criteria, this formula will have to be examined and reviewed.”

READ MORE: Population growth, climate change: Aurangzeb identifies ‘critical’ existential challenges facing Pakistan

The NFC Award is the constitutional mechanism that determines the distribution of divisible tax revenues between the federation and provinces, as well as among the provinces.

The finance minister said the government had taken immediate steps in the federal budget, including abolishing sales tax on contraceptives, but stressed that such measures were only “tactical” and insufficient to address Pakistan’s demographic challenges.

He underscored the need for measurable targets and regular monitoring under the National Population Council’s agenda, saying sustainable progress would require deep structural reforms.

Aurangzeb said international experience showed that educating girls, increasing women’s participation in the workforce, and securing the support of religious scholars were keys to reducing population growth, citing Bangladesh, Indonesia, and Iran as successful examples.

On financing population-related interventions, he said Pakistan would have access to substantial long-term external support under the World Bank’s 10-year Country Partnership Framework (CPF).

“Roughly USD 600 million to USD 700 million annually is available to finance interventions related to population, including reducing learning poverty and child stunting,” he said.

The minister reiterated that addressing population growth and climate risks was essential for ensuring Pakistan’s sustainable economic development as the country approaches its centenary.

Copyright Business Recorder, 2026