ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb on Thursday called for a rethinking of how federal funds are allocated to provinces, arguing that future disbursements should reflect human development indicators instead of just population size.
Speaking at an event organized by the Ministry of National Health Services in connection with World Population Day in the federal capital, Aurangzeb said Pakistan’s rapid population growth posed a serious challenge and must be addressed through coordinated, long-term policy interventions.
“As we move forward with revisiting and reviewing the NFC [National Finance Commission] award, the current allocation driver must be reconsidered,” he said while addressing the gathering.
“There are broader factors, such as human development indicators, which should be incorporated,” he added. “These can help shape a revised formula for how we divvy up resources between the federation and the provinces.”
The NFC is a constitutional mechanism that determines how financial resources are distributed from the federal government to Pakistan’s provinces. The existing formula primarily weighs population, though there are several influential voices within the government demanding that future formulas consider a broader range of development metrics.
The finance minister also noted Pakistan must confront two “existential issues” — climate change and population growth — if it wants to reach its long-term goal of becoming a $3 trillion economy by 2047.
“Just think about it: 40 percent of children under the age of five in this country are stunted,” he said. “If we don’t address this, there is no sustainable path forward.”
Aurangzeb noted the issue extended beyond food and sanitation, pointing to the need for birth spacing, women’s education and family planning awareness.
He also emphasized the scale of available resources for addressing these challenges.
Referring to Pakistan’s recently signed 10-year Country Partnership Framework with the World Bank, he said the agreement includes $20 billion in financing, with $600–700 million annually earmarked for population-related measures.
“We have a lot of funds already at our disposal, provided we find the right places to invest and prioritize them correctly,” he said.
Aurangzeb also argued that Pakistan’s total development spending across federal and provincial budgets exceeds Rs 4.2 trillion ($14.7 billion).
“The issue isn’t funding,” he said. “We must shift from infrastructure-heavy thinking to human capital investments.”
