According to a report published by the daily Jang, a well informed source familiar with the discussions between the Pakistan Muslim League-Nawaz (PML-N) and the Pakistan Peoples Party (PPP) revealed that both sides have agreed to maintain the National Finance Commission (NFC) Award formula and the structure of the Benazir Income Support Programme (BISP).
The decision is being viewed as an attempt to address the federal government s financial difficulties while ensuring continuity in the existing social protection and resource distribution systems.
However, under the proposed new arrangement, the provinces are expected to collectively provide more than Rs10 trillion in financial resources to the federal government, with the details to be finalized by technical committees.
According to sources, this understanding represents a compromise aimed at easing Islamabad s financial pressure without formally reopening the politically sensitive issue of the NFC Award, which determines the distribution of tax revenues between the federation and the provinces.
One reason reportedly behind the delay in presenting the 2026–27 budget in Parliament was the PPP s insistence that neither the NFC Award nor BISP should be altered.
Certain influential circles have long expressed concerns about the provincial share under the NFC arrangement established after the 18th Constitutional Amendment. The argument frequently advanced is that provinces receive more resources than their capacity to spend effectively, while the federal government is left with limited fiscal space.
On this basis, demands for a new NFC Award have periodically surfaced. However, the province of Sindh has consistently opposed any such move.
Given the federal government s financial challenges, proposals were also considered to transfer BISP to the provinces. Yet PPP emerged as the strongest opponent of this idea as well.
According to reports, PPP considered a key stakeholder in the current system has now agreed to a proposed adjustment mechanism. However, this does not necessarily mean a direct reduction in the provincial NFC share.
Instead, the adjustment may be implemented through indirect measures, such as expenditure realignment, reductions in certain federally transferred development allocations, or changes in provincial responsibilities concerning federally funded projects. Nevertheless, the top leadership has not yet made a final decision on these details.
Sources further stated that PPP representatives informed PML-N that issues such as the NFC Award and BISP are politically crucial for the party and must remain intact, while any required fiscal adjustments should be achieved through alternative means.
BISP, both in terms of its scope and funding, will remain protected, reflecting the party s long-standing position on social welfare programs.
It is understood that PML-N has successfully convinced PPP that, under the current economic circumstances, the provinces must play a role in reducing financial pressure on the federal government and improving coordination between the federation and the provinces.
