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Provinces miffed at IMF’s proposal to cut NFC share

Pakistani labourers sits on a roadside at a market in Rawalpindi on Oct. 9, 2018. (AFP)
Updated 12 October 2018
Khurshid Ahmed
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Provinces miffed at IMF’s proposal to cut NFC share

  • Move could impact health, education and welfare sectors, officials say
  • Governments say current distribution is fine and should not be reversed
Updated 12 October 2018
Khurshid Ahmed

KARACHI: Taking umbrage at the suggestion that they reduce their share from the federal pool of reserves, the four provincial governments of Pakistan said on Thursday that they would strongly resist the move.

The idea was proposed by the International Monetary Fund (IMF) as part of measures to strengthen Pakistan’s federal fiscal framework. And if the plan is brought to fruition, it would require the provincial governments to reduce their share in the National Finance Commission (NFC) Award.  

The NFC Award ensures financial resources are divided among the four provinces according to the 18th amendment, which dictates that the provinces have the autonomy to manage their budgets and expenditure. The constitutional framework demands that all four provinces have to mutually agree to any change made in the NFC Award. However, the president has the final authority to revise the provinces’ shares through an executive order if they fail to reach a consensus.

“The current distribution of resources under the NFC award is fine as once the power devolution has taken place and provinces are managing their finances themselves the distribution should not be reversed,” Taimor Saleem Khan Jhagra, Finance Minister of the Khyber Pakhtunkhwa (KP) province, told Arab News on Thursday. 

At present, the four provinces get 57.5 per cent of the resources from the divisible pool of taxes under the seventh NFC Award distribution, whereas the federal share stands at 42.5 per cent. Among the four, the Punjab province gets the lion share at 51.74 per cent, followed by Sindh at 24.55 per cent, Khyber Pakhtunkhwa at 14.62 per cent and Balochistan at 9.09 per cent. 

Reacting to the proposal, Spokesman of Chief Minister Sindh, Rasheed Channa, Rasheed Channa, told Arab News that “any move to curtail the funds would be resisted”, adding that: “Sindh is demanding that its share in NFC be increased  because of the large spending in the province in the backdrop of a large inflow of people coming in from other provinces as well”. 

Demanding a revision in the distribution of the NFC Award finances, Balochistan Finance Minister, Muhammad Arif Hasni, said: “We are suggesting that the government should also enhance our share by considering the factor of area of the province other than population and poverty.” 

Reasoning that the IMF’s aim was “to consolidate federal fiscalism” to ensure that the “federal governments are more empowered”, Dr Farrukh Saleem, Government’s spokesperson on Economy and Energy Issues, told Arab News that the proposal would be in the interest of the federation because “big expenditure including debt servicing is being incurred by the federal government”. 

Balochistan continued to raise alarm at the suggestion, adding that it had always been at the receiving end of such measures. “The successive government have misused the fund they received under the NFC award. The provincial government is in a rush position to get the funds from federal government as it is running out of funds to pay salaries to government employees,” Shaukat Populzai, president of the Baluchistan Economic Forum, said. 

He added that any cut in the federal government would not impact the province’s position towards Chinese investment – particularly in the China Pakistan Economic Corridor project – as that is being made under the federal government. “If China makes investment at the micro level such as in agriculture, mining and other social economic sectors then there will be trouble,” he added.  

Instead of curtailing the shares of the provinces, Jhagra said better engagement and coordination among provinces and the federal government could be the solution to the problem. “The center needs to enhance revenue generation by scaling up tax collections by the FBR [Federal Board of Revenue] and that is a daunting task for the government,” he said. 

Responding to a question about the financial health of the KP province, he said: “We are healthier than other provinces and we do not need to go into deficit. Our budget is higher than last year, but we do not have a comfortable fiscal space for the development in the province.”  

Pakistan on Thursday formally requested the IMF to provide financial assistance to tackle its depleting foreign exchange reserves. Confirming the news, IMF’s managing director, Christine Lagarde, said that a decision on the matter will be taken after more talks next week. 

As the country gears up for talks leading to a bailout, many at home fear that the IMF could force Pakistan to implement its proposal and ensure a provincial cut in the NFC Award share.

Topics: international news latest news headline Pakistan International Monetary Fund (IMF) National Finance Commission

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Pakistan PM orders crackdown on tax evasion, calls for modernization of revenue collection system

Updated 22 December 2024
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Pakistan PM orders crackdown on tax evasion, calls for modernization of revenue collection system

  • Pakistan’s tax-to-GDP ratio is among the lowest in the region, with government aiming to increase it to 13.5%
  • Tax reforms are also part of the IMF recommendations, which led to approval of a $7 billion loan package this year
Updated 22 December 2024
Arab News Pakistan

ISLAMABAD: Prime Minister Shehbaz Sharif on Saturday directed authorities to take strict action against tax evasion and ensure non-compliance is addressed as part of his administration’s efforts to enhance revenue collection and modernize the tax system, according to the state media.

Chairing a meeting in Lahore, Sharif emphasized the need for incorporating advanced technology to improve the Federal Board of Revenue’s (FBR) performance.

“Improving the FBR’s performance through technology is the government’s top priority,” the Associated Press of Pakistan (APP) news agency quoted him as saying.

The prime minister called for the swift completion of the FBR’s value chain digitization and instructed the rapid implementation of video analytics in the cement and tobacco industries, sectors prone to tax underreporting.

He expressed optimism that digitization efforts would help recover billions of rupees for the national treasury.

The government has recently undertaken a series of tax measures, including expanding the tax base and targeting untaxed sectors.

Earlier this year, Finance Minister Muhammad Aurangzeb emphasized the need for everyone to pay their fair share, describing tax reforms as critical to breaking the cycle of external financial reliance.

Pakistan’s tax-to-GDP ratio remains among the lowest in the region, at just over nine percent, though the government aims to increase it to 13.5% in the coming years.

The Pakistani administration has also announced to launch a crackdown on affluent individuals not yet in the tax net, with the FBR tasked to identify and penalize evaders.

The tax reforms are also part of the International Monetary Fund’s recommendations, which led to the approval of a fresh $7 billion loan package for the country this year.

Topics: Pakistan tax-to-GDP ratio

Pakistan vows zero tolerance for mistreatment of polio workers as year’s last vaccination drive ends

Updated 22 December 2024
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Pakistan vows zero tolerance for mistreatment of polio workers as year’s last vaccination drive ends

  • Polio teams often face hostility in Pakistan, with militant groups targeting them and locals resisting their efforts
  • Government promises to take strong action against cases of harassment or abuse directed at frontline workers
Updated 22 December 2024
NAIMAT KHAN

KARACHI: Pakistan’s government on Saturday said it would not tolerate the mistreatment of polio workers as the final vaccination campaign of the year to eradicate the disease concluded across much of the country amid a sharp increase in number of cases in 2024.

The weeklong nationwide vaccination drive, held Dec. 16-22, aimed to immunize 44 million children in 143 districts. Despite extensive efforts, the 2024 tally reached 64 cases this month.

Pakistan and Afghanistan remain the only two countries in the world where polio remains endemic. Regular door-to-door campaigns have been a cornerstone of Pakistan’s eradication strategy, but vaccination teams often face hostility, with militant groups targeting workers and local communities resisting efforts.

Earlier this week, authorities in Sindh arrested six people after a polio team was reportedly attacked by a tribal family in Karachi’s Qur’angi neighborhood.

“The government has adopted a zero-tolerance policy against actions targeting polio workers,” said Ayesha Raza Farooq, the prime minister’s focal person for polio eradication.

“Mistreatment of polio workers will not be tolerated,” she continued. “We are in contact with provincial authorities regarding incidents involving workers, and strict action will be taken against perpetrators.”

Farooq urged all provincial and district officials to take strong action against cases of harassment or abuse directed at frontline workers. She emphasized that protecting polio teams was critical to safeguarding children from the devastating effects of the disease.

The anti-polio campaign is yet to be carried out in Pakistan’s Balochistan province where officials announced a postponement of the vaccination drive until Dec. 30 due to a lack of preparedness.

The province has reported 26 cases this year, the highest in Pakistan, highlighting its vulnerability to the virus.

Farooq also appealed to communities to support and protect polio workers, calling them the backbone of the nation’s fight against polio.

“Ending polio is a national priority, and frontline workers are like our backbone [in this struggle],” she added.

Topics: Polio

China’s ADM Group to invest $350 million in Pakistan’s EV sector

Updated 22 December 2024
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China’s ADM Group to invest $350 million in Pakistan’s EV sector

  • The South Asian country plans to convert 30 percent of all vehicles to electric power by 2030
  • The Chinese firm will set up electric vehicle manufacturing plant, over 3,000 charging stations
Updated 22 December 2024
Arab News Pakistan

ISLAMABAD: Chinese enterprise ADM Group has announced an investment of $350 million in Pakistan’s electric vehicle (EV) sector, Pakistani state media reported on Saturday.

As part of the initiative, the Chinese firm will establish more than 3,000 electric vehicle charging stations across the South Asian country, the Radio Pakistan broadcaster reported.

Of these 3,000 charging stations, 1,000 will be set up in Sindh, 1,500 in Punjab, and 750 in Khyber Pakhtunkhwa and Balochistan provinces.

“The ADM Group will allocate $250 million for the establishment of an electric vehicle manufacturing plant in Pakistan,” the report read.

The Chinese enterprise will provide $90 million for developing the necessary charging infrastructure, according to Pakistani state media.

The electric vehicles, which will be capable of traveling up to 300 kilometers on a single charge, are expected to help reduce carbon emissions and lessen the country’s dependence on conventional fuel sources.

Pakistan’s Privatization Minister Abdul Aleem Khan said in November that 30 percent of all vehicles in Pakistan would be converted to electric power by 2030 as the South Asian country takes step to combat air pollution and other climate change effects.

“Pakistan aims to convert 30 percent of its vehicles to electric by 2030,” Khan said as he addressed the “Transport and Digital Middle Corridor and Beyond” session at the UN COP29 summit in Baku.

“Significant steps are underway to support the widespread adoption of electric vehicles in Pakistan … the government is actively working on infrastructure development for EVs, including the installation of charging stations.”

Hybrid electric vehicle sales have more than doubled in Pakistan in the past year. BYD Pakistan, a partnership between China’s BYD and Pakistani car group Mega Motors, said in September up to 50 percent of all vehicles bought in Pakistan by 2030 will be electrified in some form in line with global targets.

Warren Buffett-backed Chinese electric vehicle giant BYD announced its entry into Pakistan in August, making the nation of 250 million people one of its newest markets.

Pakistani media reported in August that standards for EV charging stations had been drafted by the power ministry, with the government considering offering them affordable electricity.

Under the government’s New Energy Vehicle (NEV) policy announced last month, the government has introduced subsidies of Rs50,000 for electric motorcycles and Rs200,000 for three-wheelers like rickshaws, with a total allocation of Rs4 billion. These subsidies will be distributed through auctions. So far, two companies have been granted licenses, and 31 more applications are under review.

Additional initiatives include offering free electric bikes or scooters to high-achieving students and reducing duties on EV components to encourage local manufacturing. The government is also set to establish a New Energy Fund and a New Energy Vehicle Center to support these measures.

Topics: Pakistan China Ties ADM Group New Energy Vehicle policy

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Sixteen soldiers, eight militants killed in northwest Pakistan gunfight — military

Updated 21 December 2024
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Sixteen soldiers, eight militants killed in northwest Pakistan gunfight — military

  • The killings occurred in the South Waziristan district after a group of militants ambushed a security outpost
  • Pakistan blames the surge in militancy on militants operating out of Afghanistan, Kabul denies the allegation
Updated 21 December 2024
KASHIF IMRAN

ISLAMABAD: Sixteen Pakistani soldiers and eight militants were killed in a gunfight in Pakistan’s northwestern Khyber Pakhtunkhwa (KP) province, the Pakistani military said on Saturday, amid a surge in militant attacks in the region.
Pakistan’s Khyber Pakhtunkhwa, which borders Afghanistan, has witnessed a number of attacks by the Tehreek-e-Taliban Pakistan (TTP) and other militant groups that targeted security forces convoys and check posts, besides targeted killings and kidnappings of law enforcers and government officials in recent months.
The latest killings occurred in the South Waziristan district during an exchange of fire after a group of militants ambushed a check post of Pakistani security forces in the Makeen area, according to the Inter-Services Public Relations (ISPR), the Pakistani military’s media wing.
“Sanitization operation is being conducted in the area and the perpetrators of the heinous act will be brought to justice,” the ISPR said in a statement. “Security forces of Pakistan are determined to eliminate the menace of terrorism and such sacrifices of our brave men further strengthen our resolve.”
The Pakistani Taliban claimed the brazen raid on the outpost near the border with Afghanistan, saying it was staged “in retaliation for the martyrdom of our senior commanders.”
The development came days after the Pakistani military said it had killed 11 militants in separate operations in KP’s Tank, North Waziristan and Mohmand districts.
Pakistan has struggled to contain surging militancy in KP since November 2022, when a fragile truce between the TTP, or the Pakistani Taliban, and the state broke down.
Islamabad has frequently accused neighboring Afghanistan of sheltering and supporting militant groups that launch cross-border attacks. Afghan officials deny involvement, insisting Pakistan’s security issues are an internal matter of Islamabad.
On Saturday, the Pakistani military urged the Taliban administration in Kabul to ensure robust border management after a group of militants tried to infiltrate from Afghanistan, leading to a skirmish that left four militants and a soldier dead a day earlier.

Topics: militancy in Pakistan Pakistan Army Tehreek-e-Taliban Pakistan (TTP)

Authorities evacuate over 50 people from remote Pakistan district hit by sectarian clashes

Updated 21 December 2024
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Authorities evacuate over 50 people from remote Pakistan district hit by sectarian clashes

  • Clashes between Sunni, Shia tribes have killed over 100 people in Kurram since last month
  • On Friday, authorities set a deadline of Feb. 1 for the warring tribes to surrender weapons
Updated 21 December 2024
REHMAT MEHSUD

PESHAWAR: More than 50 injured and ailing persons were evacuated on Saturday from the northwestern Pakistani district of Kurram, which has been hit by sectarian clashes in recent weeks, to Peshawar, provincial capital of the Khyber Pakhtunkhwa province, disaster management authorities said.
Kurram, a tribal district of around 600,000 near Pakistan’s border with Afghanistan where federal and provincial authorities have traditionally exerted limited control, has been a flashpoint for sectarian tensions between Shia and Sunni tribes for decades.
Fresh clashes last month killed more than a hundred people, triggering a humanitarian crisis with reports of starvation, lack of medicine and oxygen shortages following the blocking of the main highway connecting Kurram’s main city of Parachinar to the provincial capital of Peshawar.
The injured and ailing persons were airlifted through helicopters from Kurram and safely transported to Peshawar on the instructions of KP Chief Minister Ali Amin Gandapur, according to the Provincial Disaster Management Authority (PDMA).
“Fifty-three affected people, including 14 patients, were brought to Peshawar by helicopter from Kurram district,” the PDMA said in a statement.
“The Khyber Pakhtunkhwa Relief, Rehabilitation & Settlement Department has declared an emergency for relief activities in Kurram district in view of the prevailing situation. An emergency cell has been set up to safely transfer the affected people to hospitals in Peshawar.”
The PDMA said it was in touch with the Kurram district administration and utilizing all resources in this regard, adding that people could contact its emergency operations center at helpline 1700 for any information or guidance.
The development came a day after KP authorities set a deadline of Feb. 1 for warring Sunni and Shia tribes in the district to surrender all weapons and dismantle their bunkers to stem sectarian clashes in the region.
The decision was made at a meeting of the KP apex committee, which comprises civilian and military officials, to discuss a sustainable solution to the issue. It allowed the launch of a special air service for temporary evacuation from some parts of Kurram to protect people’s lives, according to the apex committee declaration.
“The agreement outlines that both sides will submit a detailed action plan within 15 days for voluntary submission of weapons,” read a declaration issued after the apex committee meeting.
“All weapons are to be deposited with the local administration by February 1. Additionally, it was decided that all bunkers in the area will be dismantled by the same deadline.”
In the meantime, land routes to the area would be opened intermittently on humanitarian grounds and a mechanism was put in place for secure transportation, according to the statement.
“Personnel of police and Frontier Corps will jointly provide security to the convoys,” it read.
Last month’s clashes erupted after rival tribes attacked convoys of passengers on the Parachinar-Peshawar road, which were followed by attacks on each other’s villages.
The apex committee asked both sides to avoid any violent action in the future to keep the land route safe and open at all times, hoping that the parties would fully cooperate with the government for a lasting solution to the issue.

Topics: kurram kurram district sectarian clashes militancy in Pakistan

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