Provinces, the Centre and the NFC

(A slightly modified version of the article was published in The News on July 18, 2013)

In his article ‘Safeguarding the IMF programme‘ (July 15), Dr Ashfaque H Khan stressed the need for making the Federal Board of Revenue’s revenue target less wishful for striking a realistic deal with the provinces. That is, not to expect surpluses from the provinces unless the centre achieves the promised revenues. If there is a stalemate, and the provinces fail to agree with the centre on the requisite provincial surplus targets, the expected IMF programme may be in jeopardy.

It is difficult, however, to see the IMF agreeing on a lower revenue target for the federal government. From the IMF’s point of view, a revised revenue target might have the opposite effect: the will of the federal government for overhauling resource mobilisation may be seen to have dampened. By that line of argument, a reduced revenue target will result in even lesser revenues, with no actual effect on provinces hitting their fiscal targets.

Perhaps a parliamentary review of the anomalies in the current NFC Award is the only option the government has, the importance of which is strongly echoed in Dr Ashfaque’s article. As for the short term, it is hoped that the provinces and the centre both act responsibly and don’t get too shaky even before the programme starts. After all, a few slippages are allowed even in ‘successful’ IMF programmes.

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