ISLAMABAD: President Mamnoon Hussain on Tuesday approved extension of the 7th National Finance Commission (NFC) award to provide due fiscal shares to provinces allocated in the federal budget for 2015-16.

The Presidency issued a one-line official handout informing the media that the president had signed the summary regarding extension of the 7th NFC award.

The centre has already informed provinces about their next year’s shares set in the federal budget. However, a senior government official said provinces had made their budgets on the basis of previous award.

The last year’s NFC award expired on Tuesday (June 30) and on the same day it was extended by the president.

It has been reported that extension of the existing award required consent of at least three provinces.

Sindh Chief Minister Qaim Ali Shah had earlier asked Prime Minister Nawaz Sharif to extend the award for only three months and ensure finalisation of the 9th NFC award before Sept 30 this year.

The summary approved by the president explained why the presidential order was required to extend the 7th award for another year.

The reason was that the reconstituted NFC, in its first meeting on April 28, formed five committees which would take time to complete their deliberations. It is, therefore, a constitutional requirement to extend the previous award for distribution of divisible pool taxes till a consensus is developed on the new award.

The government believed that it was in the interest of all stakeholders to continue with the previous arrangements for a full year, instead of indulging in fresh budgetary exercises in the middle of the year.

Under the present (7th NFC) award (2009) which is operative, financial autonomy of provinces has been strengthened by increasing their share in the divisible pool (taxes) from 50 per cent to 56pc in the fiscal year 2010-11 and to 57.5pc from 2011-12 onwards.

Published in Dawn, July 1st, 2015

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