ISLAMABAD, Sept 16: The government has agreed to offer an “unprecedented 44.6 per cent share” to the provinces from the federal divisible pool in the 6th National Finance Commission (NFC) award.

“For the first time, we will be extending roughly 44.6 per cent share from the federal divisible pool to the provinces in the new NFC award, and this is something unprecedented,” said Finance Minister, Shaukat Aziz.

Talking to reporters in his office here on Monday, he said an initial agreement had been reached in an NFC meeting in Peshawar on Sunday that the federal government will retain 60 per cent share while 40 per cent will be offered to the provinces.

“But if you calculate the new amount of Rs20 billion subventions and another Rs30 billion to be paid from 2.5 per cent General Sales Tax (GST) income to the provinces, the total share of the provinces would reach a substantial 44.6 per cent,” he added.

The next NFC meeting, to be held in the first week of October in Islamabad, would finalize the new award, he said.

“We want to finalize everything as quickly as possible with a view to removing the grievances of smaller provinces,” the minister said. All the controversial issues were likely to be settled before the new government took over after the October elections, he added.

Responding to a question, he said the new NFC resource distribution formula will be applicable from the next financial year.

In reply to a question, the minister admitted that there were some differences between the NWFP and Wapda over the issue of hydel power generation income.

“We have proposed to them to have arbitration to resolve the issue,” he said. He expressed the hope that both the NWFP and Wapda would resolve their differences, so that everything was settled in the final NFC meeting.

He told a reporter that Sindh, for the first time, would be getting considerable subvention to improve its financial affairs. “But we have told the Sindh authorities that the amount of subvention should go to the rural areas to improve the lot of the poor,” he said.

To another question, the finance minister said the provinces have been allowed to seek direct funding from the international donors for which the federal government will stand as guarantor.

However, he said the federal government will monitor the development activities in provinces with a view to ensuring prudent and transparent functioning of the provincial governments.

He was asked why Punjab had not been offered subvention in the proposed NFC award although there was extreme poverty in the southern Punjab. “The province of Punjab is relatively comfortable. Therefore, it will not get any subvention,” the finance minister said, adding the representatives of Punjab at the Peshawar meeting did not raise the issue.

“In fact, Punjab has shown extreme graciousness, and that is why we plan to offer this time a very good resource distribution formula,” he observed.