The Fiscal Implications of More Provinces

Mettis Global has published an analysis by economic analyst Shahid Anwar arguing that a new province can make administrative sense yet lack the finances to sustain itself. He says Pakistan's debate on creating more provinces largely overlooks this gap, and points to the 11th National Finance Commission review of the federal-provincial fiscal framework as a timely moment to examine the economics. According to the Pakistan Economic Survey 2025-26, provincial revenue totalled Rs7.22 trillion in July to March FY2025-26, of which Rs5.63 trillion came as federal transfers, roughly 78% of the total.

Own-source revenue rose 28.3% and tax revenue 25.8% in the same period, which the author welcomes while noting that transfers still dominate. Anwar argues that a new unit brings no tax base by itself, and the 11th NFC would need to settle how a larger pool is shared and whether population stays the main yardstick. Provincial current expenditure of Rs4.47 trillion far exceeded Rs1.61 trillion in development spending, making recurring costs central to any assessment.

The author proposes a Provincial Fiscal Impact Statement covering revenue potential, expected transfers, recurrent costs and pension liabilities over 10- and 20-year horizons. He also points to a Fiscal Responsibility Framework for any province receiving substantial transfers, and presents stronger local government decentralisation as an alternative route. The piece closes by arguing that provinces should be judged on whether each can sustain its own finances.