The Sindh government has reaffirmed its unwavering commitment to protecting the constitutional rights and fiscal share of the province at the upcoming National Finance Commission (NFC) deliberations.
This comes at a decisive moment for Pakistan’s economic governance, with the IMF’s latest Governance & Corruption Diagnostic Report (2025) underscoring critical weaknesses in federal fiscal transparency, state capacity and institutional performance.
“The NFC Award is not merely a mechanism of distributing financial resources — it is a constitutional guarantee of fairness, equity and balanced development across all provinces,” a statement issued on Wednesday quoted Sindh government spokesperson Sukhdev Hemnani as saying.
He said that the last NFC Award had been finalised before the abolition of the concurrent legislative list. “Post-18th amendment, provinces shoulder significantly expanded responsibilities in health, education, social protection and key service-delivery sectors. Any suggestion of reducing provincial shares contradicts both constitutional design and the practical needs of governance.”
The recurring narrative pushed by certain quarters that the federal government is “left with nothing” after transferring resources to the provinces is factually incorrect and economically misguided, he added.
“The issue is not the provincial share, which rightfully returns to the federating units from where taxes are collected. The real problem lies in chronic governance failures: loss-making state-owned enterprises, persistent tax evasion, smuggling, irrational elite subsidies and weak institutional oversight.”
He recalled that under the last fiscal arrangements, it was agreed that the FBR’s tax-to-GDP ratio would be raised to 15 per cent, yet this target remains unrealised even today.
“Pakistan loses more than 5-6 per cent of the GDP annually to tax evasion and smuggling, and a similar magnitude is lost to governance lapses, mismanagement and distortive subsidies.
“These structural failures — not provincial shares — are the true source of the fiscal strain Pakistan faces. The national conversation must focus on root causes rather than deflecting blame onto the provinces.”
He reiterated that fiscal federalism must evolve further to deliver equity. “The NFC’s multi-criteria formula remains essential for addressing regional disparities. Any departure from these principles — particularly in a climate where the IMF has highlighted risks of state capture — would undermine the constitutional foundation of cooperative federalism.”
