Finance Minister Muhammad Aurangzeb has indicated that the government may revisit the National Finance Commission (NFC) Award formula, saying the current population-based distribution of resources is becoming increasingly unsustainable and should be reviewed as part of wider structural reforms.
Speaking at a World Population Day seminar, the finance minister described rapid population growth and climate change as Pakistan’s two most significant long-term challenges. He noted that 82 percent of the NFC Award allocation is currently determined by population, suggesting that the formula may be reconsidered during negotiations for the next NFC Award.
What Is the NFC Award?
The National Finance Commission (NFC) Award is the constitutional framework that governs how federal tax revenues are distributed between the federal government and the provinces, as well as among the provinces themselves.
The existing formula, introduced under the Seventh NFC Award in 2009, uses several criteria, including:
- Population
- Poverty levels
- Revenue generation
- Inverse population density
Among these, population carries the highest weight in determining each province’s share.
Call for Long-Term Structural Reforms
Aurangzeb said the government has already taken initial measures to address population-related issues, including removing the federal sales tax on contraceptives in the latest budget.
However, he stressed that meaningful progress will require:
- Structural policy reforms
- Measurable national targets
- Regular monitoring through the National Population Council
Learning from Regional Success Stories
The finance minister pointed to Bangladesh, Indonesia, and Iran as examples of countries that successfully managed population growth through:
- Expanding girls’ education
- Increasing women’s participation in the workforce
- Engaging religious scholars in public awareness efforts
World Bank Support
Aurangzeb also announced that Pakistan is expected to receive $600–700 million annually under the World Bank’s 10-year Country Partnership Framework. The funding will support population-related initiatives, including efforts to reduce child stunting and learning poverty, while improving overall human development outcomes.
