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A RATHER damning indictment of the seventh NFC Award has just been published by the World Bank in a study titled Strengthening Fiscal Federalism in Pakistan. The study plugs a crucial gap in our understanding of the impact that the NFC Award has had on the state’s ability to function and deliver social services. The findings are not flattering for the performance of the provincial governments across Pakistan, since 2009.
In typical World Bank style, the authors generously pepper the report with observations about the strengths that the NFC Award has brought, noting it “provides predictability and protects provincial revenue shares”, “supports provincial autonomy” and is “consensus-based”. Then it pivots, usually with “[h]owever, from a technical perspective…” to the critical commentary.
The critical vocabulary is notably blunt for a World Bank document: the mechanism rests on “an arbitrarily determined pool of resources … distributed … based on multiple factors with again arbitrarily determined weights”; the seventh Award produced “windfall gains to provinces”; “financing has not followed function”; and the indicator weights “reflected a negotiated outcome rather than application of a clear legal or technical framework”. The Award, it says, has been “a material contributor” to the “structural federal fiscal deficit”.
