The upcoming National Finance Commission (NFC) award, with its first meeting set for December 4 seems to be structured around a single, misguided belief.

That belief is now well known, because of all the propaganda peddling it. In simple terms: “Pakistan’s fiscal problems are because too much money has been given to the provinces, and this has left the federal government broke. If the NFC award is restructured to take back resources from the provinces, all will be well.”

Needless to say, this belief is wrong. All we need to do is look at the facts. There are four key questions to consider.

The answer is no, absolutely not. The truth is that provinces do not receive anywhere near 57.5% of what should be the divisible pool. Certainly, what they are allowed to spend is a lot less.

Hafiz Pasha, in his excellent article in the Business Recorder on October 7 (Link) proved this. If the current NFC award is adjusted to include the impact of the forced provincial surpluses that the provinces cannot spend (Rs921 billion in fiscal year 2024-25; Rs1,500 billion in fiscal 2025-26), and the Petroleum Levy Collections (Rs1,220 billion in fiscal 2024-25, Rs1,468 billion in fiscal 2025-26), the effective provincial shares reduce to 45.8% for 2024-25, and to 42.3% for 2025-26. This is a far cry from the marketed 57.5%........

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