KARACHI, May 29: President Pervez Musharraf has summoned all the 11 members of the National Finance Commission (NFC) for a meeting on Friday at Islamabad in a bid to thrash out a consensus on the thorny issue of distribution of national resources among the provinces.

Well-placed sources say that this NFC meeting was earlier summoned on Saturday by the President but has been advanced by a day on Friday for some urgent reason. It is being held amidst reports that there are sharp differences among the provinces on the criteria of resource distribution.

Knowledgeable observers, who are closely watching the proceedings of the NFC since the announcement of its formation more than two years ago, are guessing whether the Friday meeting would come out with an award.

Those who expect announcement of the NFC award in Friday meeting have a convincing argument to offer. The NFC award is valid for five years and the last NFC gave its award on February 2, 1997 when caretaker government was about to quit and an elected government was about to take over. Constitutionally, the validity of the NFC award declared in 1997 has expired and a new resource distribution formula by the current NFC is due from July next.

The constitution may be held in abeyance, but the government wants to convey loudly its respect of the constitutional requirements, is the argument being offered on possibility of a new NFC award.

There are few others who believe that Friday meting is simply an exercise to work out a consensus among all the four provinces on thorny issues, but the award would be given by October. “Politicians can make a mess out of this issue,” a retired bureaucrat remarked, who said the hasty announcement of the NFC award in February 1997 was also out of same fear of the politicians.

But Islamabad will have to face a tough situation on Friday as all the four provinces apparently are unanimous in demanding a change in the ratio of distribution of federal divisible pool. Under the existing arrangement 62.5 per cent of the pool goes to Islamabad and 37.5 per cent is shared by all the four provinces.

Knowledgeable sources said that finance ministers of all the four provinces were in contact with each other to make unanimous demand before the President on Friday to change this ratio to equal sharing of resources between the provinces and the federation.

Sources say that the federal government has asked the provinces to give due consideration to Islamabad’s defence requirements and debt-servicing obligations while demanding a change in the ratio of resource distribution. But provinces are reported to be pleading that same amount of consideration be given to the real nation building tasks being done by them.

Under the proposed devolution plan, the federal government is expected to pass on many more responsibilities in social sectors to the provinces. This will reduce the financial burden of the federation but will demand more funds in provinces and hence a case for greater share for provinces in the federal divisible pool.

Servicing of federal loans is another issue on which there is a consensus among the provinces. Although no confirm figures are available on the total debt stock of all the provinces, in case of Sindh, the total accumulated liability is Rs110 billion. The interest rates have gone up beyond 18 per cent and claims more than Rs12 billion a year from Sindh’s budget.

Provinces want the federal government to write off a substantial part of their respective debt stock, a lowering of interest rates and a repayment arrangement, which should clear off the principal amount within five to seven years.

Since 1974, population has been the single criterion for allocation of resources to the provinces, which has made Punjab the sole beneficiary in the last 28 years. Sindh had been agitating in all the previous NFCs for giving due weightage to revenue generation, backwardness, population influx from Punjab and NWFP and from other countries and resource generation efforts in matter of resource distribution.

Earlier, Sindh could not find a receptive ear in other provinces but is now reported to be getting sympathetic response from Balochistan and NWFP. Balochistan now wants the size of the province also be given weightage in allocation of resources.

“If population remains the sole criterion for resources distribution and jobs then there would be an unending race in all the four provinces to increase their population,” an economist had remarked in a seminar sometimes back.

The NFC is headed by the federal finance minister and includes the federal secretary of the ministry of finance, besides finance ministers of all the four provinces and one private statutory member nominated by the governor of each of the four provinces. Sindh is represented by Finance Minister Dr Abdul Hafeez Sheikh. Abdul Karim Lodhi, a retired bureaucrat, is the private statutory member on the NFC.