Senior leadership of the Pakistan Muslim League-Nawaz (PML-N) and Pakistan People’s Party (PPP) have reached a broad understanding on key aspects of the country’s resource distribution framework, without formally touching the National Finance Commission (NFC) Award and Benazir Income Support Programme (BISP). A credible source, who is privy to the discussions between the two sides, said that both parties have agreed that the NFC Award formula and structure of BISP will remain untouched, a move framed as an effort to address the Centre’s financial concerns while preserving continuity in the country’s existing social protection and revenue-sharing architecture. However, the provinces will collectively adjust fiscal resources worth over one trillion rupees (over Rs1,000 billion) toward the federal government under a revised arrangement being discussed as part of broader economic stabilisation efforts. Technical committees will work out the details. Sources describe the reported understanding as a compromise aimed at addressing Islamabad’s mounting financing pressures without formally reopening the politically sensitive NFC Award, which determines how tax revenues are distributed between the federation and the provinces. The presentation of the budget 2026-27 in parliament is delayed because of PPP’s reluctance to touch the NFC and BISP. There is a lot of uneasiness among certain influential stakeholders over the extent of NFC share given to the provinces after the 18th Amendment of the Constitution. It is said that the NFC share distribution formula has given provinces a lot of money, beyond even their capacity to utilise it, whereas the Centre is left with meagre resources. For the same reason, there has been a demand for a new NFC award to address the concerns of the Centre. However, Sindh has been a strong opponent of it. In view of the Centre’s financial difficulties, there were considerations that the BISP and its funding be transferred to the provinces. Here, too, the PPP was the strongest opponent. Now the PPP, which is a key partner in the present hybrid system, has reportedly agreed to the proposed adjustment mechanism, which may not necessarily come in the form of a direct reduction in provincial shares under the NFC formula. Instead, it could involve indirect channels such as expenditure realignments, reduced federal transfers under certain development heads, or adjustments in provincial obligations linked to federal-funded projects. However, these specifics have not yet been decided by the top leadership. PPP representatives, the source said, told the PML-N that the NFC Award and BISP are politically very important for the party and, therefore, should not be touched. They should remain intact, while the required financial adjustments would be made through other options. BISP will remain protected in both scope and funding, reflecting the party’s long standing political commitment to social welfare programs. The PML-N is said to have succeeded in persuading the PPP, which governs Sindh and Balochistan, that the provinces will have to help ease the fiscal strain on the Centre and improve coordination between the federal and provincial governments amid ongoing economic challenges.
PML-N, PPP agree on fiscal deal without formally touching NFC, BISP: cabinet source
