NFC Award formula: Aurangzeb hints at reviewing population-based distribution

Finance Minister Muhammad Aurangzeb on Wednesday indicated that the National Finance Commission (NFC) Award formula may need to be reviewed, saying the current resource distribution system, which gives 82% weight to population, is no longer sustainable and should be reconsidered as part of broader economic reforms.

 

Speaking at a World Population Day seminar, the minister said Pakistan's long term economic progress depends on addressing two major challenges: rapid population growth and climate change.

 

Aurangzeb noted that the existing NFC formula places significant emphasis on population when allocating resources among provinces, arguing that this criterion should be reassessed when discussions on the next NFC Award move forward.

 

The NFC Award is the constitutional framework that governs the distribution of divisible tax revenues between the federal government and provinces, as well as among the provinces themselves.

 

The finance minister said the government had introduced immediate measures in the latest federal budget, including the removal of sales tax on contraceptives, but described these as short term initiatives that alone would not resolve Pakistan's demographic challenges.

 

He stressed the importance of setting measurable goals and strengthening monitoring under the National Population Council, adding that meaningful progress would require comprehensive structural reforms.

 

Aurangzeb said global experience shows that girls' education, greater female workforce participation, and the involvement of religious scholars play an important role in managing population growth, citing Bangladesh, Indonesia, and Iran as successful examples.

 

On financing future population initiatives, he said Pakistan is expected to benefit from long term funding under the World Bank's 10-year Country Partnership Framework (CPF).

 

According to the minister, around $600 million to $700 million annually will be available to support programmes aimed at population management, reducing learning poverty, and tackling child stunting.

 

He concluded that effectively addressing population growth and climate related challenges will be essential to ensuring Pakistan's sustainable economic development in the years ahead.