ISLAMABAD, Oct 28: The provinces will have to generate additional resources on their own after getting the proposed ‘maximum fiscal autonomy from the centre’, says PM’s Adviser on Finance Dr Salman Shah.

He told Dawn that the Ministry of Finance would favour granting maximum fiscal autonomy to the federating units but would require them to generate additional resources to meet their expenditures and increase spending on the social sector.

“Hopefully, maximum subjects and responsibilities contained in the concurrent list will be transferred to the provinces shortly,” he added.

He pointed out that the centre had already offered increased share to the provinces in the revised National Finance Commission (NFC) award and would further support them once the issue of granting them more fiscal autonomy was finalised.

Dr Shah said that the centre had agreed in principle to offer full autonomy to its federating units to help them augment their existing resources.

A parliamentary committee headed by Senator Wasim Sajjad is expected to shortly hold its final meetings and finalise its recommendations on grant of autonomy to the provinces.

When contacted, president of ruling Pakistan Muslim League Chaudhry Shujaat Hussain said that the bill for autonomy would be presented in the national assembly during its next session. “The issue of granting more autonomy to the provinces will be decided before the end of this year,” he said confidently.

Chaudhry Shujaat said the president and the prime minister had agreed on increasing autonomy to the provinces in order to ‘satisfy’ them on all major issues concerning the federation and its units.

Responding to a question, Dr Shah said that financial position of the federal government would further improve after materialisation of the negotiations currently being held with international donor agencies for converting about $4.5 billion earthquake related loans into grants.

In the net present value, he said, these were considered ‘concession loans’ offered on low mark-up. “In the first place we are urging the donors to convert them into grants, but if that is not possible then we will request them to apply only service charges to those loans,” Dr Shah added.

In reply to a question, he said the government was most likely to achieve its 6.5 percent inflation target set for the current financial year.

“Tight monetary policy of the central bank is helping us to achieve that target by June 30, 2007,” he said, adding that money supply situation had improved due to which core inflation was also coming down.

Dr Shah claimed that prices were gradually coming down as the government was ensuring price stability through magistrates across the country.