ISLAMABAD, Sept 15: The federal government on Thursday proposed a new formula envisaging 48 per cent share of the divisible pool for provinces, saying that the additional burden of higher petroleum prices had made it impossible to concede more.
Informed sources told Dawn that the formula was presented to provinces by Finance Secretary Naveed Ahson at the first meeting of the newly-constituted seventh National Finance Commission (NFC). Adviser to the prime minister on finance Dr Salman Shah also attended the meeting.
The second round of the meeting was presided over by Prime Minister Shaukat Aziz where NFC officials asked provinces to examine the new formula prepared on the directives of President Gen Pervez Musharraf and give their comments on it within a week.
The participants were advised to maintain confidentiality of the formula to avoid political bickering.
Three provincial ministers declined to discuss details of the formula saying it could create problems instead of developing a consensus. They, however, said the formula envisaged proposals for vertical and horizontal distribution of resources.
An official statement issued after the meeting said the prime ministers had discussed with the NFC members broad guidelines for an amicable finalization of the award. It quoted the prime minister as saying that resources be distributed in an equitable manner so that the pace of development was accelerated and provinces had adequate resources to meet development and recurring needs.
This, the premier said, had to be accompanied by good governance and better implementation of development projects so that resources spent achieved desired results.
NWFP Finance Minister Sirajul Haq told Dawn the NFC issue had not been resolved yet. He demanded reconsideration of the new proposal keeping in view the development needs of smaller provinces.
Sindh Finance Minister Syed Sardar Ahmad said the federal government had asked provinces to resolve differences among themselves over the distribution of resources and not to expect more share from the centre owing to additional burden of high international petroleum prices.
He said President Musharraf would resolve the NFC issue on his return from the United States. He said Sindh had pleaded that a party could not be a judge of its own cause and hence an independent NFC should be constituted to resolve the issue on a permanent basis through a constitutional amendment. He said other provinces supported this demand.
He said it was demanded that federal loans to provinces should be written off because provinces had already repaid the principal amount with heavy interest. He said Sindh had also called for a refund of Wapda scarp loans which the provincial government had repaid in excess. It was emphasized that foreign loans relent to provinces should be rescheduled. He said other provinces had also supported this demand.
Mr Ahmed said that Sindh had refused to give anything more out of its GDS share to Balochistan because it felt its share in the GDS was the creation of gas produced from its own fields.
He said provinces had demanded that the provincial share in the divisible pool should not be less than 50 per cent and the prime minister said he would see to it if there was any financial cushion.
Mr Ahmed said Sindh had again demanded that weightage be given to revenue collection for distribution of federal resources, but Punjab and the NWFP did not agree to it.
Balochistan Finance Minister Syed Ahsan Shah told Dawn that the centre had provided another opportunity to provinces to resolve their differences through negotiations.
He said provinces had authorized the president to take a decision on the NFC award and Balochistan felt that there was no need for provinces to discuss the issue any more. He said Balochistan would accept the decision to be taken by the president.
He pointed out that Balochistan had borrowed Rs19 billion as cash development loans between 1978 and 2000 and regretted that even after repaying Rs42 billion it had Rs11 billion outstanding.