ISLAMABAD: The first session of the newly formed National Finance Commission (NFC) remains nowhere on the horizon, with the latest proposed date of November 18 quietly pushed back. The delay comes as the government revises the economic growth forecast downward by up to 0.7 percentage points, setting the new estimate at 3.5 per cent for the current fiscal year.
Officials familiar with the matter said the prime minister wants to build political consensus with coalition partners before opening technical discussions on Centre–province financial arrangements. The 11th NFC, formed on August 22, has already seen multiple postponements, first due to administrative issues and then because of flood-related concerns raised by Sindh.
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With the 7th NFC Award — meant for a five-year term — still governing resource distribution after more than 15 years, calls for revisiting the formula have intensified. Key stakeholders, including the finance ministry, armed forces, and the IMF, are pressing for a rebalancing of the divisible pool that currently allocates 57.5 per cent of federal taxes to the provinces.
Meanwhile, the federal government has expanded its revenue space outside the NFC framework through the petroleum development levy and by securing large provincial cash surpluses, collectively amounting to nearly Rs3 trillion this year. But slipping tax collection and slower GDP growth threaten these arrangements, especially as recent floods have further dented agricultural output, infrastructure, trade, and inflation stability.
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The planning ministry estimates that flood-related losses of around Rs822 billion will drag economic growth down to 3.5–3.9 per cent. With agriculture hit hardest and inflation rising again, the government expects pressure on exports, imports, and fiscal targets — though stronger remittances may help cushion the external deficit.