The long-awaited 11th National Finance Commission, which was expected to replace the seventh award agreed more than a decade and a half ago, has once again run into delays. Despite the optimism generated by its inaugural sitting in December, where a roadmap was laid out for subsequent meetings, the second session that was scheduled for mid-January has yet to take place. This absence of progress has left the eight technical working groups, formed to deliberate on the vertical and horizontal distribution of federal tax revenues, largely inactive.

Only two of these groups have convened, and that too just once, underscoring the hesitation among political stakeholders to confront the difficult realities of fiscal federalism. At the heart of the matter lies the centre’s claim of a structural imbalance created by the reduced share it received under the existing award, which it argues has widened its fiscal deficit and added to its debt burden. The provinces, however, have consistently challenged this narrative, presenting data to defend their position.

The Constitution clearly stipulates that the NFC must meet regularly and finalise a new award to govern the distribution of resources from the federal divisible pool. Yet this constitutional requirement has never been fully honoured. The persistence of the current award, which has remained in place since its mandated five-year term expired in 2015, reflects the deep mistrust between the federation and its constituent units.

This trust deficit has prevented consensus on a new formula, leaving the country to operate under an arrangement that was designed for a very different economic context. The hope remains that the present delay in convening the second NFC meeting, and the inactivity of the working groups, is due to technical reasons and will not become a prolonged stalemate. Pakistan’s economy has undergone profound changes over the past 15 years, and the challenges it faces today demand a fresh approach to revenue sharing and expenditure responsibilities between the centre and the provinces.

It is important to recognise that attributing the country’s economic difficulties solely to the existing award is misplaced. The award itself is not the cause of structural weaknesses; rather, it is a framework that has been stretched far beyond its intended lifespan. To treat it as the source of fiscal distress is to misdiagnose the problem. What is required is a willingness on all sides to move beyond entrenched positions and to negotiate in good faith for the collective interest of the people.

The centre must acknowledge the legitimate concerns of the provinces, while the provinces must appreciate the fiscal pressures faced by the federation. Only through compromise and cooperation can a new award be crafted that reflects the realities of today’s economy and ensures equitable distribution of resources.

The NFC is not merely a technical exercise in dividing revenues; it is a test of the federation’s ability to function in harmony. The longer the process is delayed, the greater the risk that economic pressures will deepen and political divisions will harden. Pakistan’s future stability depends on bridging this gap. The centre and provinces must seize the opportunity to demonstrate maturity, rise above narrow interests, and deliver an award that strengthens the federation while serving the needs of its citizens.