The federal government has proposed changing the formula for distributing funds among provinces. Instead of population-based sharing, the Centre wants to use climate adaptation and performance indicators. Planning Minister Ahsan Iqbal called the current system “regressive” because it rewards population growth, not real needs. The government plans to push this change at the upcoming National Finance Commission (NFC) meeting in August.
Iqbal also criticized the incomplete devolution of powers to local governments. He said provinces have not shared responsibilities or resources with district-level administrations as promised. He stressed that local governments must be empowered to improve services. The Centre has already transferred powers to provinces, and now provinces should do the same with districts.
Meanwhile, Chief Statistician Naeemuz Zafar defended Pakistan’s current 2.7% economic growth estimate. He said the Pakistan Bureau of Statistics has been transparent about data and methodology. Zafar explained that agricultural output data includes livestock, fisheries, and forestry, not just crops. However, he noted the growth figure might be revised soon based on updated spending data.
The planning minister warned that fiscal space is shrinking. The development budget has fallen from 1.2% to 0.8% of GDP in recent years. After debt and defense spending, the Centre will have little money left for other programs. Therefore, provinces must help with expenses and invest more in human development, especially child nutrition, where 40% of children are stunted.
Finally, Iqbal highlighted Pakistan’s focus on water security and economic growth. He accused India of weaponizing water but warned against it. The government plans to boost agriculture growth by 4.5% through investments in crops and livestock. The budget aims to support recovery, resilience, and opportunities for all Pakistanis under the Uraan Pakistan vision.