Pakistan to hold key meeting on provinces' revenue share this month

Pakistan will hold an important meeting this month to discuss the formula for the division of resources among provinces, the finance minister announced on Monday.

Senator Muhammad Aurangzeb said the meeting of the National Finance Commission (NFC) will discuss key constitutional and fiscal matters.

Responding to a question, the minister said discussions will center around the NFC Award, population, and education during the upcoming meeting”.

The National Finance Commission is a constitutionally mandated body that recommends how federal revenues, particularly taxes, should be distributed between the central government and the provinces.

The commission specifically addresses the distribution of the divisible pool of taxes between the Federation and the provinces.

The last time an award under this formula was made to the provinces was in 2009, when the 7th NFC Award was approved. Since then, no new award has been approved due to the subsequent commissions’ inability to reach consensus on a new formula.

In a press briefing on Monday, Aurangzeb said the NFC meeting was scheduled to be held in September, but it was deferred due to the floods. The process would now move forward, he added.

The press briefing was conducted by Aurangzeb, PM’s Privatization Advisor Muhammad Ali, Power Minister Sardar Awais Leghari, and IT & Telecom Minister Shaza Fatima, who briefed journalists on the government’s structural reform agenda, stating that Pakistan’s economic trajectory is showing strong improvement.

‘Good news’ on investment

Aurangzeb said all three major international rating agencies have upgraded Pakistan’s economic outlook, while the recent IMF staff-level agreement is further evidence that the economy is “moving in the right direction.”

“Our direction is correct,” Aurangzeb said, emphasizing that the government’s focus is on sustainable economic stability rather than short-term growth. “Pakistan has witnessed boom-and-bust cycles in the past; the challenge now is how to avoid them. Structural reforms are crucial for long-term progress.”

Aurangzeb also hinted at positive developments on the investment front, saying people will “soon hear some good news related to new investments in the country”.

“We will also rationalize the tax system, as FBR collection from the retail sector has also surged from PKR 82 billion to PKR 166 billion.

He also credited Prime Minister Shehbaz Sharif for steering the economic reform process, calling it a whole-of-government approach, and acknowledged the support from Saudi Arabia, China, and Gulf countries, which has helped stabilize Pakistan’s economy.

Pension reforms

Meanwhile, Finance Secretary Imdad Ullah Bosal said the direct contribution pension scheme for armed forces personnel will become applicable next year.

The armed forces have a different service structure, so we are holding detailed discussions with them regarding pension reforms, Bosal explained. He noted that while a neighboring country had earlier introduced a similar direct pension system and later rescinded it, Pakistan is proceeding carefully with its reforms.

He further revealed that the federal government has already hired around 8,914 employees under the new pension system.