KARACHI, June 14: The Provincial Finance Commission of Sindh on Monday worked out a strategy for distribution of funds between the province and the districts in the next fiscal year.

Sindh Finance Minister and PFC Chairman Syed Sardar Ahmad presided over the meeting which was attended by City Nazim Naimatullah Khan, Sukkur Nazim Syed Nasir Hussain Shah and other members, says a press release.

The meeting has decided to give top priority for distribution of funds from the gross provincial pool to the expenditures that are common to the province and the local governments. These are pensions, debt servicing, subsidy and priority programmes relating to special education activities under the Sindh SAC.

After accounting for these priority area expenditures the net divisible pool will then be divided in a ratio of 45:55 for the provincial and district governments combined against the existing vertical sharing of 60:40.

From July 2005 onwards one line transfers would be made to the districts to enable them finance the current and development expenditures. The horizontal shares among the 16 districts from a 55 per cent share of the net provincial pool will be distributed on the basis of the criteria worked out.

This criteria is 50 per cent on the basis of population, 17.5 per cent on the basis of backwardness, 7.5 per cent on the basis of tax collection and 20 per cent transitional transfers. The districts showing better performance will be given a share from an amount to be kept aside.

The PFC recommended that the proceeds of the 2.5 per cent GST would be transferred to the district governments, town and union councils directly as straight transfer primarily on the basis of historical share.