In October 2018, Finance Minister of Balochistan, Arif Muhammad Hassani called a press conference. He started his monologue about the critical financial conditions, which his government had inherited from the predecessors. He claimed that the budget deficit of Balochistan for the year 2018-19 is Rs. 75 billion and the government does not have the required amount of resources to funds its development programme. However, one particular statement he made towards the end of his monologue shocked the journalists in attendance. “Balochistan government will not be able to pay salaries to its employees, from next year onwards, if the federal government did not come for help.”
This claim of Arif Muhammad Hassani summed up the financial health of Balochistan. According to critics, the Balochistan government is facing a financial predicament owing to several years of bad governance, ill-planning, and misutilization of the budget. The province is running a huge deficit and as a result, it’s facing severe resources constraints while its development needs are rising. The financial problems of Balochistan are expected to linger on unless the province gets a good deal in the upcoming 9th National Finance Commission (NFC) Award.
What is NFC?
According to the constitution of Pakistan, the federal government collects taxes and other forms of revenues on behalf of provinces. The federal divisible pool is the name given to the notional account where all the revenue collected from the country is stored. Every year the revenues collected in the federal divisible pool are distributed among federal government and provinces based on an NFC award.
The 7th NFC was awarded in Pakistan in 2010 during the government of PPP. As per the 7th NFC formula, 57.5 percent of the federal divisible pool was distributed among the four provinces. The distribution was based on a weighted average of 82 percent poverty, 10.3 percent of revenue generation, 5 percent of revenue generation and 2.7 percent of inverse population density. Based on this formula share of Punjab was 51.74 percent, Sindh 24.55 percent, Khyber Pakhtunkhwa and the share of Balochistan increased from 5.11 percent to 9.09 percent
Consequently, the revenues of the province increased significantly due to this award and it began to prepare large budgets. However with the passage of time, the needs of the province increased and as a result, the resources attained through 7th NFC proved to be less. In this backdrop, the Balochistan government is pushing for a new NFC award so that it can get additional resources.
The negotiations for 8th NFC award started in 2015 but remained inconclusive. Since 2015, 7th NFC Award is being extended under a presidential order. In January 2019, President of Pakistan constituted the 9th NFC which would negotiate and approve the 9th NFC award. NFC is chaired by federal minister Asad Umer and Finance Minister of every province is the statutory member of NFC. Apart from that, every province has also nominated a non-statutory member. The first meeting of 9th NFC was held in Islamabad on 5th February.
The case for Balochistan
Mehfooz Ali Khan is the non-statutory member of Balochistan in 9th NFC. He played an instrumental role in increasing the share of Balochistan in 7th NFC award when he was the Secretary Finance. Now, retired from government service, He heads Governance and Policy Project (GPP) in Balochistan.
While managing the affairs of his new job simultaneously, He explained the case for Balochistan in 9th NFC with great detail to Balochistan Voices. He said that Balochistan is building its case in 9th NFC around several points. He said that arena of terrorism has shifted from Khyber Pakhtunkhwa (KP) to Balochistan and therefore Balochistan needs additional share in NFC award just like KP got in 7th NFC. “Balochistan fares poorly in Human Development Index, Food Insecurity Index, and Hunger Index and we will use them to argue for an increase in the share of Balochistan under poverty component of NFC.
Khan added that Balochistan would demand from the federal government to allow it to bilaterally enter into loan agreements with foreign institutions. “Balochistan got a loan from world bank ten years ago when dollar cost 55 rupees and now we have to repay when the dollar is valued at 140. This is totally unfair and we want this to be revised,” he claimed.
He added that in the year 2017-18, Pakistan got 334 Billion as external financing for PSDP and share of Balochistan was just 1.6%. “We would demand that Balochistan should be provided a share in external financing at least equal to its NFC share of 9.09%,” He told Balochistan Voices. He continued “We would also press for a due share of jobs for people of Balochistan in autonomous bodies and CPEC security.” He explained that there are 500,000 employees of autonomous bodies all over Pakistan and 30,000 of them should have been from Balochistan, however that’s not the case.
The areas need to be focused
Non-statutory member of Balochistan in 9th NFC further said all provincial governments and federal government need to focus on three main areas – law and order, post-retirement benefits and ability of FBR to collect taxes.
“When I was Secretary Finance the law and order budget was 1.7 billion and post-retirement benefit budget was 870 million. Now they are 37 billion and 27 billion respectively,” He said. “Unless we do not control expenditures on Law and Order and post-retirement benefits, all governments will face resources constraints,” He claimed.
Moreover, there is also a need to rationalize the share of the provinces based on their contribution to the GDP. Balochistan contributes around 7% to the GDP of Pakistan but it only gets resources equal to 0.5% of GDP of the country.
The Stance of Balochistan Awami Party (BAP) Government
Balochistan Awami Party (BAP) emerged as the leading political party after general elections last year and formed a government in Balochistan. The BAP government under the leadership of Jam Kamal has vowed that decisions of Balochistan will be made in Balochistan. BAP government has decided to take a strong stance on the case of Balochistan in 9th NFC.
Zahoor Buledi, provincial minister of Information, claimed that Balochistan will put up a strong fight in 9th NFC award meetings. “We will press for revising the resources distribution formula of NFC so that the province can get a higher share,” He told Balochistan Voices. He added that the Balochistan government will also argue for getting control of Saindak, which is our constitutional right. He emphasized on the need to empower the Council of Common Interests (CCI) to resolve the pressing issues between provinces and center.
The Bap government is making tall claims about its stance in 9th NFC award. However, only time will tell if they succeed in increasing the share of Balochistan in the federal divisible pool. However, at the same time, they also need to bring reforms in budget spending in Balochistan. Budgetary analysis proves that the province wasted all the surplus it gained after 7th NFC due to ill-planned budgetary spending. People of Balochistan will only benefit if the provincial government brings efficiency in its budgetary spending irrespective of the outcome of 9th NFC meetings.
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