ISLAMABAD: Senior leadership of the Pakistan Muslim League-Nawaz (PML-N) and Pakistan Peoples Party (PPP) have reached a broad understanding on key aspects of the country’s resource distribution framework, while keeping the National Finance Commission (NFC) Award and Benazir Income Support Programme (BISP) formally unchanged, according to sources.
A source privy to the discussions said both sides agreed that the NFC Award formula and the structure of BISP will remain intact, in what is being described as an attempt to ease federal fiscal pressures while maintaining continuity in Pakistan’s revenue-sharing and social protection systems.
Under the emerging arrangement, provinces are expected to collectively adjust fiscal resources worth over Rs1,000 billion in favour of the federal government through a revised coordination mechanism currently under review. Technical committees are expected to finalise implementation details.
Officials said the understanding is aimed at addressing Islamabad’s financing constraints without reopening the politically sensitive NFC framework, which governs tax revenue distribution between the federation and provinces under the Constitution.
The development comes amid delays in the preparation of the Budget 2026–27, with sources citing PPP reservations over any formal changes to the NFC Award and BISP as a key factor behind the delay. The issue has also revived debate over the impact of the 18th Constitutional Amendment and the adequacy of federal fiscal space.
Some stakeholders have argued that the existing NFC formula has significantly increased provincial shares, leaving limited resources at the federal level, prompting calls for a new NFC Award. However, the PPP, which governs Sindh and is a key coalition partner, has strongly opposed reopening the framework.
Similarly, proposals to transfer BISP funding responsibilities to provinces were also resisted by the PPP, with party representatives maintaining that both the NFC Award and BISP are politically sensitive and must remain unchanged.
Instead, the emerging mechanism may involve indirect fiscal adjustments, including expenditure realignment, changes in federal development transfers, or revisions in provincial obligations linked to federally funded projects. However, no final agreement has been reached on these modalities.
Sources said PPP leadership informed the PML-N that BISP will remain fully protected in both structure and funding, reaffirming the party’s long-standing commitment to social welfare programmes.
The PML-N, according to sources, has pressed for greater provincial cooperation to ease federal financial pressures and improve fiscal coordination amid ongoing economic challenges, while ensuring that constitutional frameworks remain formally untouched.