Islamabad — President Asif Ali Zardari has constituted the 11th National Finance Commission (NFC) to devise a new award for the equitable distribution of financial resources between the federation and provinces, the Finance Division announced on Friday.
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The newly constituted commission will be chaired by Federal Finance Minister Muhammad Aurangzeb, with the four provincial finance ministers serving as ex-officio members. In addition, four distinguished experts have been appointed as members representing each province:
- Nasir Mahmood Khosa, former senior bureaucrat, representing Punjab
- Dr. Asad Sayeed, noted economist and researcher, representing Sindh
- Dr. Musharraf Rasool Cyan, former bureaucrat and public policy expert, representing Khyber Pakhtunkhwa
- Farmanullah, seasoned policymaker, representing Balochistan
Constitute of 11th National Finance Commission:
Yesterday President of Pakistan constituted the 11th National Finance Commission.
Interestingly, from 7-10th NFC the vertical and horizontal distribution remained intact despite 25th amendment (merger of FATA into KP)
It was… pic.twitter.com/5Jh6oUi3KJ
— Muzzammil Aslam (@MuzzammilAslam3) August 23, 2025
Mandate of the 11th NFC
The NFC has been tasked with making recommendations to the President on:
- Distribution of the net proceeds of federal taxes as stipulated under Article 160(3) of the Constitution;
- Allocation of grants-in-aid from the federal government to provinces;
- Regulation of borrowing powers for both federal and provincial governments;
- Sharing of financial expenditures incurred by the federation on subjects within provincial jurisdiction or trans-provincial matters;
- Joint financing arrangements for national projects;
- Any other financial issue referred to the NFC by the President.
The taxes under consideration include income tax (excluding remuneration paid from the Federal Consolidated Fund), sales tax on goods, excise duties, export duties on cotton, and other levies as specified by the President.
Background, and Context
The constitution of the 11th NFC comes at a crucial juncture, as the 10th NFC Award expired on July 21, 2025. The 7th NFC Award, announced in 2009, has remained in effect for nearly 15 years, well beyond its five-year tenure, due to continued disagreements between the federation and provinces on revenue-sharing formulas. Successive governments have extended its implementation annually.
Under the 18th Constitutional Amendment, provinces secured constitutional protection for their share of revenues, ensuring that no unit’s allocation could be reduced below its previous entitlement. However, concerns have persisted within the federal government about limited fiscal space and the need to revisit the distribution mechanism to balance national and provincial responsibilities.
Looking Ahead
The 11th NFC Award is expected to address long-standing debates on resource allocation, debt sustainability, and financing of both provincial services and national-level projects. Its recommendations will carry significant implications for fiscal federalism, governance, and economic stability in Pakistan.
The Finance Division emphasized that the commission would begin deliberations shortly, with the aim of producing a consensus-based award that ensures fairness, transparency, and sustainability in Pakistan’s federal financial structure.
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