Pakistan: NWFP to get Rs17bn more under NFC

By Mohammad Ali Khan

PESHAWAR: The cash-strapped Frontier government will get around Rs17 billion additional resources from the federal government under next National Finance Commission (NFC) as compensation for damage caused by the ongoing war on terror.

'Collections made on the basis of seventh NFC award, finalised in Lahore on Friday, shows substantial increase of NWFP revenue by putting it at Rs150 billion in next financial year 2010-11,' Khalid Aziz, the NWFP government adviser on Finance, told Dawn here on Saturday.

He claimed that a presentation to the commission made by him on behalf of NWFP government on 10 Dec provided a platform for federation and all the federating units to reach a consensus NFC award.

'It was a win-win formula for all the stakeholders,' he said, adding in this formula due weightage was given to population, inverse population density, revenue collection and poverty.

On horizontal distribution of federal divisible pool, population has been allocated a weight of 82 per cent, backwardness 10.3 per cent, revenue five per cent and inverse population density 2.7 per cent.

Referring to the Frontier's stance of including cost of war as a factor in distribution formula, Mr Aziz said the province would get Rs17 billion as additional amount, even if financial projections for the next financial year were taken into account.

Currently the size of federal divisible pool was estimated around Rs1,200 billion, while for the next fiscal year it was projected as Rs1,380 billion.

The NWFP government will get one per cent of the undivided federal divisible pool as the cost of conflict.

'Likewise, upward adjustments on the account of other factors such as population and poverty, its share will also grow drastically, mobilising additional revenue for the government,' he said.

The NWFP government, in the same presentation, had advocated allocating 80 per cent weightage to population and 20 per cent to the remaining factors, representing each province.

On the cost of war, Mr Aziz said the commission had also approved a formula to measure the impact of insurgency on any province and subsequently funds would be mobilised from the NFC purview to offset such impacts.

'If military moves into any province to cull militancy, like NWFP, such allocations will be made from the NFC jurisdiction,' he added.

The federal government had allocated Rs24 billion as special grant to augment security arrangements in NWFP, of which Rs6 billion had already been disbursed to the province.

However, the amount under NFC for this head would be in addition to such allocations, he said.