ISLAMABAD, July 31: The National Reconstruction Bureau (NRB) on Wednesday finalized the composition of the provincial finance commissions which will be headed by respective provincial finance ministers. Every body will be comprised three members each from provincial government, private sector and elected Nazimeen.

NRB Chairman Lt-Gen Tanwir Hussain Naqvi made this announcement at a meeting attended by the members of commissions, World Bank and DFID while the Balochistan Finance Commission was represented by provincial government.

The composition would be shortly made part of the Local Government Ordinance through another ordinance, an NRB official said.

The meeting also reviewed the interim awards notified by the provincial governments. NRB chief termed the awards a milestone in the history of Pakistan.

“It is for the first time that the funds will be transferred in a transparent and equitable manner,” he added. The provincial finance commissions have been made totally independent, as the majority of the members will not be from the government.

He, dilating upon the main function of the finance bodies, said they were to distribute the resources of federal units between the province and the local governments.

“The funds shall be transferred directly to the local governments on monthly basis on actual receipts of the provinces,” he said.

The annual budget of the provinces would be formulated in accordance with the award, and the shares of local governments reflected in the budget would be subject to voting by the respective provincial assembly.

He said the fiscal decentralisation ensured that the powers to use the funds transferred to the local governments would rest with them.

“The local governments being closer to the people are better judges of the priorities of the people. “The citizens participation has been further ensured through the community boards and village councils,” he added.

The chairman added that the interim-finance system for 2001-02 had been replaced by the new Local Government Finance System for the fiscal year 2002-03.

The interim arrangement was put in place as sufficient time was not available for the fiscal year 2001-02. The local governments were put in place in August 2001 while the budgetary process was initiated much earlier.

Each province had developed its own formula for allocating resources according to its priorities and status of development. A detailed discussion followed the presentations. A number of technical matters were brought to the notice of the commissions and some recommendations were brought to the notice of them and some recommendations were also suggested.

The procedure of managing the transition from a discretionary system of resource allocation to a formula-based system of fiscal transfers was also discussed thoroughly. The input from the international experts proved very useful for the commissions.

The main conclusion, which emerged during the meeting was that the interim awards should be finalized before September 2002. In addition the award must address the issue of fiscal effort, fiscal capacity, revenue generation and performance.

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