ISLAMABAD: The federal government is considering sharing debt servicing and electricity circular debt with the provinces after they refused to revisit their share under the NFC Award.
Finance ministry officials indicated a consensus that provinces should contribute to debt servicing and circular debt, especially after their share of the divisible pool increased to 57.5% under the 2010 NFC Award.
Currently, the federal government retains only 42.5% of the divisible pool, making interest payments and circular energy debt unsustainable.
Former state minister for finance Dr. Aisha Ghaus Pasha told Business Recorder that achieving a new consensus requires agreement from all provinces and the federal government, which seems unlikely as provinces are unwilling to reduce their share.
She acknowledged the federal government’s concerns over its diminishing share from the 2010 NFC Award but suggested addressing this by devolving ministries and divisions as planned under the 18th Constitutional Amendment of the same year.
Instead of revisiting the provinces’ share, Pasha recommended the federal government should reduce its own expenses through government rightsizing, pension reforms, and better debt management.
Pasha also advocated for fiscal decentralization to the district level for greater expenditure accountability, noting that this was part of the last NFC Award but remains incomplete due to the lack of political will to transfer resources to districts.
