7th NFC Award

A World Bank report highlights that Pakistan's 18th Amendment and 7th NFC Award aimed to strengthen fiscal federalism by decentralizing powers and resources to provinces. However, implementation has been ineffective, with federal deficits, provincial inefficiency in revenue mobilization, and weak local governance undermining progress. The report emphasizes incomplete devolution, governance failures, and the need for reforms like improving provincial revenue and empowering local governments.

Khyber Pakhtunkhwa Chief Minister Muhammad Sohail Afridi unveiled a Rs2.17 trillion budget for 2026-27, stating that funds for the federal government require approval from PTI founder Imran Khan. The budget includes no new taxes, a 7% raise in salaries and pensions, and property tax exemptions for properties up to 5 marlas. The province projects a Rs48 billion deficit to be covered by savings, not borrowing.

Sindh unveils a Rs3.56 trillion budget for 2026-27 with a Rs36.9 billion deficit, featuring no new taxes, a 7% salary and pension increase, and a minimum wage hike to Rs43,000. The budget prioritizes development projects in Karachi and transportation infrastructure, including Rs13.2 billion for the Red Line BRT and over Rs3.5 billion for the Yellow Line.

The budget delay highlights a fiscal deadlock between Pakistan's federal government and provinces over frozen NFC shares and additional funding demands. Critics argue the Centre is undermining the 18th Amendment and 7th NFC Award by pressuring provinces to return funds, risking a backdoor revision of the fiscal arrangement.