ISLAMABAD: President Asif Ali Zardari has constituted the 11th National Finance Commission (NFC) to recommend a new revenue-sharing formula between the federal government and the provinces, the Finance Division announced on Friday.
According to the official notification, Finance Minister Muhammad Aurangzeb will serve as the commission’s chairman, with the finance ministers of all four provinces designated as members.
In addition to the government officials, the commission includes four non-statutory members, each nominated by a respective provincial government:
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Nasir Mahmood Khosa, former senior bureaucrat, representing Punjab
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Asad Sayeed, economist and policy researcher, representing Sindh
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Dr Musharraf Rasool Cyan, former bureaucrat, representing Khyber Pakhtunkhwa
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Farmanullah, appointed by the Balochistan government
Mandate and Constitutional Scope of the NFC
Under Article 160(3) of the Constitution, the commission is tasked with making recommendations to the president on the distribution of the net proceeds of certain federal taxes, including:
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Taxes on income (excluding federal salaries)
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Sales and purchases of goods (imported, exported, manufactured, or consumed)
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Export duties, especially on cotton
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Excise duties and other levies as specified by the president
The NFC will also advise on:
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Grants-in-aid from the federal government to provinces
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Borrowing powers of both federal and provincial governments
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Cost-sharing arrangements for national or trans-provincial projects
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Financial responsibilities for subjects that fall within the provincial domain
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Any additional finance-related matters referred by the president
Background and Need for Reform
The move comes amid growing calls to revise the existing revenue-sharing mechanism, which has remained largely unchanged since the 7th NFC Award in 2010. Although the 10th NFC expired on July 21, no new consensus has been reached due to persistent disagreements between the federation and the provinces.
As a result, the 7th NFC Award has been annually extended for nearly 15 years, despite its original five-year term. The deadlock primarily stems from differences over the allocation formula, particularly in the wake of the 18th Constitutional Amendment, which guarantees that a province’s share in any new award cannot be lower than its previous share.
With Pakistan facing significant fiscal challenges, the formation of the 11th NFC is seen as a critical step toward ensuring equitable resource distribution, fiscal discipline, and stronger federal-provincial coordination.
