In the intricate dance between borrowers and lenders, a critical point often emerges where the borrower becomes ensnared in a web of dependence, subject to the whims of their creditor. As the borrower’s life becomes increasingly intertwined with the loans they receive, the lender’s influence can extend beyond financial matters, penetrating into personal decisions and lifestyle choices.
This power shift can lead to a situation where the borrower, burdened by debt, is compelled to comply with the lender’s directives to maintain their financial stability. This shift from empowerment to vulnerability can compromise personal autonomy, as the borrower’s decisions are overshadowed by the lender’s influence, adding to their stress and anxiety.
In such circumstances, the borrower may feel trapped in a cycle of debt, with no clear path to financial freedom. It is crucial for borrowers to exercise caution and prudence when entering into financial agreements, as loans, while offering temporary relief, can lead to long-term challenges if not managed wisely.
In another scenario, the lender might intervene in the borrower’s personal and financial affairs with the intention of empowering the borrower financially and ensuring the repayment of the loan.
The situation between Pakistan and the IMF echoes a recurring cycle of borrowing and interference. Pakistan consistently seeks loans from the IMF, which, in turn, persistently intervenes in the nation’s personal affairs, policies, and politics. The IMF’s intervention in Pakistan’s affairs stems from the nation’s indebtedness to it. Maybe this involvement is driven by the organisation’s aim to bolster Pakistan’s financial standing and enabling it to repay all the loans. A recent interference entails IMF suggesting Pakistan to take another look at the NFC Award.
Before going deep into the matter under discussion, we should know that what exactly NCF Award is. So, the distribution of revenue between the center and four provinces of Pakistan is titled as NFC Award’ or National Finance Commission Award. In simple words, it is a financial agreement, in which government collects taxes from all over the country, then NFC Award decides how much of that money goes to the federal government and how much goes to the provincial governments. After the enforcement of the Constitution 1973, seven NFC Awards have been announced so far. First National Finance Commission Award was announced in 1975.
The 7th NFC Award was signed on 30th December 2009 and its recommendations were given in 2010 through President’s Order No.5 of 2010 (Distribution of Revenues and Grant-in-Aid Order, 2010), and this 7th Award still continues.
Article 160 of the Constitution of Islamic Republic of Pakistan authorises the President of Pakistan to approve distribution of revenues between the federation and the provinces through an Order (the NFC Award), on the recommendation of the National Finance Commission (NFC). It is also mentioned in the Article 160 of the constitution that the federal Finance Minister and Provincial Finance Ministers shall monitor the implementation of the Award bi-annually and lay their report before both Houses of Majalis-e-Shoora (Parliament) and the Provincial Assemblies. According to the NFC Award, 42 per cent revenue goes to the federal government, while 57.5 per cent goes to provincial governments. The distribution is made on the basis of population, poverty, population density, and revenue collection.
Coming back to the matter of IMF’s interferes with NFC Award certain negotiations were put forth. During the negotiations between IMF and Pakistan in March 2024, IMF suggested bringing some changes to the NFC Award formula and increase the portion of revenue of federal government, by decreasing the portion of revenue of the four provinces. According to the governments officials, this suggestion was rejected by the federal government as an amendment in the constitution was required, even mentioned in the 18th amendment that resources of provinces can increase but not decrease.
Politicians from prominent political parties questioned this demand of IMF, such as Senator Sherry Rehman from Pakistan Peoples Party (PPP) who questioned IMF’s assertion in the process of changing the NFC formula. Same claim was made by Chief minister Murad Ali Shah who shed light on the constitutional importance of NFC Award, adding that the constitution did not allow the provincial share to be decreased.
Meanwhile, Former finance minister Miftah Ismail contends that the current revenue-sharing formula, inadequately addresses tax collection of the provinces, leaving the federal government burdened with debt. He highlights that after distributing around 60 per cent of revenue to provinces, the centre lacks sufficient funds for debt servicing, forcing it to borrow for interest payments and other expenditures. The federal government is on the verge of bankruptcy, contrasting sharply with financially robust provinces.
Therefore, any interference from the IMF must be considered with a pinch of salt and constitutionally mandated formula must persevere.
The writer is our Editorial Assistant and journalist based in Peshawar.
NFC Award and IMF’s Continued Interference in Pakistani Politics
In the intricate dance between borrowers and lenders, a critical point often emerges where the borrower becomes ensnared in a web of dependence, subject to the whims of their creditor. As the borrower’s life becomes increasingly intertwined with the loans they receive, the lender’s influence can extend beyond financial matters, penetrating into personal decisions and lifestyle choices.
This power shift can lead to a situation where the borrower, burdened by debt, is compelled to comply with the lender’s directives to maintain their financial stability. This shift from empowerment to vulnerability can compromise personal autonomy, as the borrower’s decisions are overshadowed by the lender’s influence, adding to their stress and anxiety.
In such circumstances, the borrower may feel trapped in a cycle of debt, with no clear path to financial freedom. It is crucial for borrowers to exercise caution and prudence when entering into financial agreements, as loans, while offering temporary relief, can lead to long-term challenges if not managed wisely.
In another scenario, the lender might intervene in the borrower’s personal and financial affairs with the intention of empowering the borrower financially and ensuring the repayment of the loan.
The situation between Pakistan and the IMF echoes a recurring cycle of borrowing and interference. Pakistan consistently seeks loans from the IMF, which, in turn, persistently intervenes in the nation’s personal affairs, policies, and politics. The IMF’s intervention in Pakistan’s affairs stems from the nation’s indebtedness to it. Maybe this involvement is driven by the organisation’s aim to bolster Pakistan’s financial standing and enabling it to repay all the loans. A recent interference entails IMF suggesting Pakistan to take another look at the NFC Award.
Before going deep into the matter under discussion, we should know that what exactly NCF Award is. So, the distribution of revenue between the center and four provinces of Pakistan is titled as NFC Award’ or National Finance Commission Award. In simple words, it is a financial agreement, in which government collects taxes from all over the country, then NFC Award decides how much of that money goes to the federal government and how much goes to the provincial governments. After the enforcement of the Constitution 1973, seven NFC Awards have been announced so far. First National Finance Commission Award was announced in 1975.
The 7th NFC Award was signed on 30th December 2009 and its recommendations were given in 2010 through President’s Order No.5 of 2010 (Distribution of Revenues and Grant-in-Aid Order, 2010), and this 7th Award still continues.
Article 160 of the Constitution of Islamic Republic of Pakistan authorises the President of Pakistan to approve distribution of revenues between the federation and the provinces through an Order (the NFC Award), on the recommendation of the National Finance Commission (NFC). It is also mentioned in the Article 160 of the constitution that the federal Finance Minister and Provincial Finance Ministers shall monitor the implementation of the Award bi-annually and lay their report before both Houses of Majalis-e-Shoora (Parliament) and the Provincial Assemblies. According to the NFC Award, 42 per cent revenue goes to the federal government, while 57.5 per cent goes to provincial governments. The distribution is made on the basis of population, poverty, population density, and revenue collection.
Coming back to the matter of IMF’s interferes with NFC Award certain negotiations were put forth. During the negotiations between IMF and Pakistan in March 2024, IMF suggested bringing some changes to the NFC Award formula and increase the portion of revenue of federal government, by decreasing the portion of revenue of the four provinces. According to the governments officials, this suggestion was rejected by the federal government as an amendment in the constitution was required, even mentioned in the 18th amendment that resources of provinces can increase but not decrease.
Politicians from prominent political parties questioned this demand of IMF, such as Senator Sherry Rehman from Pakistan Peoples Party (PPP) who questioned IMF’s assertion in the process of changing the NFC formula. Same claim was made by Chief minister Murad Ali Shah who shed light on the constitutional importance of NFC Award, adding that the constitution did not allow the provincial share to be decreased.
Meanwhile, Former finance minister Miftah Ismail contends that the current revenue-sharing formula, inadequately addresses tax collection of the provinces, leaving the federal government burdened with debt. He highlights that after distributing around 60 per cent of revenue to provinces, the centre lacks sufficient funds for debt servicing, forcing it to borrow for interest payments and other expenditures. The federal government is on the verge of bankruptcy, contrasting sharply with financially robust provinces.
Therefore, any interference from the IMF must be considered with a pinch of salt and constitutionally mandated formula must persevere.
The writer is our Editorial Assistant and journalist based in Peshawar.
Trending Posts