A significant breakthrough has been achieved as the provinces have agreed to support the federal government under a federal fiscal deficit support agreement. The development is expected to remove major hurdles in finalizing the upcoming national budget and strengthen coordination between the federation and the provinces.
A joint meeting of the government and the Pakistan Peoples Party’s budget technical committee was held in Islamabad. PPP leaders Saleem Mandviwalla, Naveed Qamar, and Sherry Rehman attended the meeting, along with Deputy Prime Minister Ishaq Dar, Finance Minister Muhammad Aurangzeb, and senior officials from the Federal Board of Revenue (FBR).
According to sources, participants discussed various options for addressing the federal government’s financial shortfall and ultimately agreed on a mechanism for providing support. The federal government had reportedly requested a total of Rs1.7 trillion from the provinces, while Punjab had already expressed its willingness to contribute more than Rs500 billion.
Senator Saleem Mandviwalla said that key issues were resolved during a high-level meeting at the Presidency. He stated that all four provinces had reached a consensus on providing between Rs1.2 trillion and Rs1.7 trillion to the federal government, citing Pakistan’s strategic and security-related challenges as a major reason for the additional funding requirement.
Mandviwalla added that there was no conflict between the federation and the provinces, and that discussions mainly focused on the mechanism for transferring the funds. He said delays in finalizing budget matters were caused by the Gilgit-Baltistan elections and the unavailability of key government officials. With the federal fiscal deficit support agreement now in place, issues related to the development budget and other financial matters have largely been settled, paving the way for the presentation of the federal budget in the coming days.