Pakistan's Economy Exits 'ICU,' Ministers Debate Budget and NFC Formula
Defence Minister Khawaja Asif announced that Pakistan's economy has recovered from a critical state, crediting an International Monetary Fund (IMF) bailout for restoring solvency. He projected a 6-7% growth rate within the next two years and advocated for tax reforms to foster a conducive payment environment. Concurrently, Health Minister Mustafa Kamal criticized the National Finance Commission (NFC) award's 82% population-based distribution formula as flawed, arguing it disincentivizes population control and disadvantages smaller provinces. Kamal highlighted future infrastructure needs due to unchecked population growth and proposed incentives for provinces controlling their population, while also praising the removal of tax on contraceptives.
Defence Minister Khawaja Asif stated on Tuesday that Pakistan’s economy has transitioned out of the “intensive care unit” (ICU). Speaking in the National Assembly, he noted that the country was previously insolvent and faced a constant risk of default. Asif attributed the economy's recovery and solvency to a bailout from the International Monetary Fund (IMF), which came with strict conditions.
The minister expressed optimism for future economic performance, projecting that Pakistan could achieve a growth rate of 6-7% within the next one to two years. He also identified existing “inbuilt taxes” as a barrier to solvency and called for tax reforms, suggesting that tax rates should be adjusted to encourage widespread compliance and pride in payment, rather than prompting evasion.
During the same session, Health Minister Mustafa Kamal criticized the National Finance Commission (NFC) award’s fund distribution formula, describing it as “flawed.” Kamal, speaking during a debate on the federal budget for fiscal year 2026-27, highlighted that the NFC formula is 82% population-based.
Kamal argued that this population-centric approach discourages provinces from controlling their population growth. He pointed out that Balochistan, being the smallest province by population, receives the lowest share, suggesting it would need to increase its population to secure a larger share. He contrasted this with an unnamed neighboring country, where the population's weightage in its equivalent award is 17%, with other factors like revenue, backwardness, and income playing a larger role.
The Health Minister warned of the strain on resources if population growth continues unchecked, estimating a need for 64,000 new primary schools, jobs for 65 million young people, and 135,000 new hospital beds. He proposed a “32% incentive” for provinces that actively work to control their population. Kamal also lauded the government’s budget proposal to remove the 18% tax on contraceptives, asserting it would help reduce the birth rate and positively impact the population. He also raised concerns about the effective utilization of funds allocated under the NFC, suggesting that the current governance system hampers the delivery of resources and solutions to the public.
According to Dawn Pakistan, these remarks were made during a National Assembly session discussing the federal budget.
