Progress on the 11th National Finance Commission (NFC) has slowed sharply, with neither its second meeting nor most of its technical working groups showing meaningful movement weeks after the inaugural session.
The NFC held its first meeting on December 4 after repeated delays. The session was followed by public assurances of regular monthly meetings. The next meeting was scheduled for mid-January. That meeting has yet to take place.
Sources say the commission has effectively stalled. Of the eight technical working groups notified in December, only two have met. Even those meetings were limited to initial discussions. The remaining six groups have not convened at all.
Officials familiar with the process say the delay has raised concerns about whether the NFC can meet its constitutional responsibility of finalising a new award after more than 15 years.
The most active group has been the committee examining the financial impact of the merger of former tribal areas into Khyber Pakhtunkhwa. The group is led by KP’s finance minister. It sought detailed figures from the federal government to assess how allocations for the merged districts would affect provincial shares.
More than seven weeks later, the requested data has not been shared. The group has therefore been unable to hold a second meeting.
Another working group, tasked with reviewing taxes included in the divisible pool, met once towards the end of January. The group discussed whether any new taxes should be added or existing ones removed. One proposal under consideration involves excluding customs duty from the divisible pool on the grounds that international trade is a federal subject.
No progress has been reported on the remaining six groups. These committees are responsible for some of the most sensitive issues. They include vertical distribution of resources between the centre and provinces, national debt management, improving the tax-to-GDP ratio, straight transfers to provinces, and criteria for horizontal distribution among provinces.
Several of these groups are headed by provincial finance ministers. This has led to questions about the lack of urgency across both federal and provincial levels.
Federal officials have attributed the slowdown to scheduling challenges. They cite foreign visits by senior finance officials as one reason for the delay. Provincial leaders, however, dispute this explanation. They say meetings have repeatedly been postponed due to the absence of federal representatives.
Tensions have also emerged over the scope of the NFC’s mandate. Sindh has objected to discussions on expenditure responsibilities. It argues that the Constitution limits the NFC to revenue distribution only. The federal government has reportedly sought legal advice to justify broader deliberations.
At the first meeting, the centre outlined ambitious revenue targets. It urged provinces to significantly increase their own-source revenues. Property tax, agricultural income tax and sales tax on services were highlighted as key areas. Provinces were also asked to contribute more towards reducing the fiscal deficit.
The federal government warned that the fiscal imbalance has widened over the years. Rising debt and growing expenditure pressures were cited as major concerns.
The 11th NFC was constituted in August but faced repeated postponements before its first meeting. The previous NFC award, finalised in 2009, remained in effect far beyond its constitutional term.
While that award increased provincial shares, later fiscal measures altered the balance in practice. Both the centre and provinces have accused each other of failing to meet revenue commitments.
