Key points:

• The federal government plans to increase provincial shares in the budget to 48.7% by 2027.
• Provinces will receive Rs 10,350 billion by the fiscal year 2026-27 under the NFC Award.
• Pakistan’s total debt is projected to reach Rs 79,731 billion by the end of the current fiscal year.
• The government is implementing measures such as re-financing to reduce the debt burden.

The federal government announced on Sunday an ambitious 3-year economic plan aimed at increasing the provinces’ share in the federal budget from the current 39.4% to 48.7% by 2027, ARY News reported.

Offtake to the provinces under the NFC Award would surge to Rs 10,350 billion by FY2026-27. In the next fiscal year, provincial shares would jump to Rs 8,921 billion and would reach Rs 10,350 billion by FY2026-27.

This fiscal year will retain 39.4% of the budget that is to be transferred to the provinces under the NFC Award. The government has also acknowledged the need for revisiting the resource distribution method so that it better serves the needs of the provinces under the NFC.

The stock of debt outstanding for Pakistan would surge to as high as Rs 79,731 bln by the end of the current fiscal year. On the domestic front, local loans would increase by around Rs 7,671 bln, with a projected rise of Rs 818 bln in foreign loans. The measures resultant for mitigation of debt include re-financing arrangements and interest rate risk management.

Earlier, Pakistan clinched a deal with the International Monetary Fund on a three-year, $7 billion aid package. The Washington-based institution explained that the new program—subject to validation by the Fund’s Executive Board—would lead to stabilization of the macroeconomic environment and create conditions that will promote stronger, more inclusive, and resilient growth in Pakistan.

Also Read: World Bank Agrees $1 Billion Loan for Dasu Project.