ISLAMABAD, Dec 4 The provinces are reported to have reached a broad understanding to give about 25 per cent shares to inverse population density, poverty measured by human development index and revenue collection and 75 per cent to population for horizontal distribution of divisible pool resources.
The next meeting of the National Finance Commission is scheduled for Dec 9 and 10 in Lahore. According to sources, the federal government has assured the provinces that their share in the federal divisible pool will be raised to 55 per cent and this could be raised to 57 per cent in case of pressing needs. The centre has also agreed to deduct only one per cent of collection charges on divisible pool taxes instead of the current five per cent.
A provincial finance secretary told Dawn the provinces had agreed that inverse population density would be given 10 per cent weight in the horizontal distribution of resources.
Poverty would be defined on the basis of human development index and second poverty survey numbers, instead of absolute poverty numbers and would be given seven per cent weight. Similarly, revenue would be given about eight per cent weight in provincial shares, but it was yet to be ascertained if it would be on the basis of generation or collection, he added. The sources said the provinces had almost reached an understanding on the horizontal distribution of resources. Since Punjab has agreed to consider factors other than population for provincial shares on the divisible pool, an agreement on the horizontal distribution would be formally announced at the Lahore meeting, they added.
Finance ministry sources said that another round of discussions at the federal level might be required to reach an agreement on the vertical distribution of divisible pool taxes between the centre and the provinces. The sources said that although the provinces had been demanding 60 per cent shares from the federal government, they realised that it would not be possible for the centre, at least over the next five years, to offer more than 57 per cent shares because of higher expenditure on defence and debt-servicing.
The US plan to deploy 30,000 additional troops in Afghanistan, the sources added, might force Pakistan to increase security related expenditure in coming months to secure its border from Taliban infiltration.
It was in this background Finance Minister Shaukat Tarin recently met senior US military officials and asked them to immediately release coalition support fund and military financing facility so that Pakistani army could effectively combat militants in tribal areas.
The US military authorities have promised to speed up the release of more than $2 billion to Pakistan held up for a long time.