World Bank Recommends Changes to Pakistan's NFC Award Formula

Jul 2, 2026

66 min

Jul 2, 2026 13:32

World Bank urges Pakistan to revamp NFC Award formula

## Call for NFC Award Overhaul

The World Bank has recommended that Pakistan revise its National Finance Commission (NFC) Award formula. The current system, which heavily relies on population as a criterion for revenue distribution, is seen as contributing to a federal fiscal deficit and inadequate public service delivery. The proposed changes include adopting a fiscal equalisation model that considers provinces' spending needs and revenue capacity.

## GST and Tax Reforms

The report highlights the inefficiencies in Pakistan's fragmented General Sales Tax (GST) system. It suggests unifying GST collection under a central administration to improve revenue performance and reduce compliance costs. Additionally, the World Bank urges improvements in agricultural income tax collection and harmonisation of property taxes.

## Strengthening Local Governments

Local governments in Pakistan remain financially weak despite constitutional protections. The World Bank recommends regular Provincial Finance Commission awards and greater financial autonomy for local bodies. It also suggests that provinces share the costs of the Benazir Income Support Programme, while maintaining the national beneficiary registry at the federal level.

## Public Spending and Accountability

Despite increased provincial spending since the 18th Amendment, much of it goes towards recurrent expenses rather than essential services like education and healthcare. The report calls for linking federal transfers to measurable improvements in key areas such as education, healthcare, and governance.

Read the full story at the source

What you need to know to get Emirates ID?

Leave your details and get a guide as a gift to avoid mistakes

Article contents