ISLAMABAD: International Monetary Fund (IMF) called upon Pakistan to reopen discussions on National Finance Commission (NFC) award, seeking to address ongoing imbalance in distribution of fiscal resources between federal and provincial governments.

During opening round of discussions for $ 1.1 billion loan tranche, Nathan Porter, IMF Mission Chief to Pakistan raised concerns over distribution of resources and responsibilities, underscoring need for more equitable arrangement. Finance Minister Muhammad Aurangzeb represented country.

Government officials disclosed that IMF emphasised need to reassess NFC award, citing disparities in resource allocation between federal and provincial authorities. Pakistani authorities informed IMF that provincial shares cannot be reduced without bringing constitutional amendment and making all provinces agree to new formula. 2010 NFC award had been agreed for period of five years but since then there has not been any consensus to revisit it.

IMF also raised issue of excessive spending by provincial governments, which can undermine this fiscal year’s primary surplus target of Rs 400 billion.

Key among demands outlined by IMF is freezing of revolving credit for electricity and gas, coupled with an immediate cessation of theft in these sectors.

Furthermore, IMF insisted on halting local gas supply to power plants, emphasising urgency of complete digitisation within Federal Board of Revenue.

Additionally, IMF pressed for swift transition of Distribution Companies into private sector administration, highlighting necessity for clearly defined timeline.

Expressing deep-seated concern over persistent surge in commodity prices within Pakistan, IMF delegation questioned disparity compared to global trends, urging Pakistani authorities to take decisive measures to curb inflation.

In response to these demands, Pakistani authorities committed to utilising technology to enhance tax collection, affirming their determination to meet tax target for current fiscal year.

FBR Chairman Amjad Zubair Tiwana reiterated Pakistan’s commitment to achieving tax target of 9,415 billion rupees for fiscal year.

Published in The Daily National Courier, March, 15 2024

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