Govt reviews structural reforms, fiscal federalism with SPDC

December 16, 2025 (MLN):  Government priorities on economic reform, fiscal federalism and evidence-based policymaking were reinforced as part of efforts to strengthen governance, fiscal sustainability and long-term development.

These issues were discussed at a meeting between the Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, and a delegation of the Social Policy and Development Centre (SPDC) led by its Chairman, Mr. Javed Jabbar, said a press release issued.

The delegation also included SPDC Board Members Mr. Ahmed Farooq Bazai, Ms. Mahtab Akbar Rashdi, Mr. Naveed Kamran Baloch, and Dr. Saba Gul Khattak.

Welcoming the delegation, the finance minister acknowledged SPDC’s three decades of independent and non-partisan research and its sustained engagement with successive federal and provincial governments, particularly on intergovernmental fiscal relations.

He emphasized the importance of informed and technically sound input in addressing Pakistan’s complex economic and governance challenges.

The minister briefed the delegation on the government’s institutional reform and rightsizing agenda and noted that the process is being implemented in phases to ensure transparency and effectiveness.

He clarified that the focus is not on reducing employment but on addressing inefficiencies, fiscal leakages, excessive subsidies and structural weaknesses in state-owned entities that impose a heavy burden on the national exchequer.

Recommendations emerging from the exercise, he said, are under cabinet review for approval and implementation.

On the National Finance Commission (NFC), the minister said the initial meeting had helped create a constructive environment for dialogue between the federation and provinces.

He added that eight working groups have been notified to carry forward technical discussions strictly on a consensus basis and invited SPDC to provide analytical and policy input, particularly on allocation criteria and intergovernmental fiscal arrangements.

Discussing governance and transparency, the finance minister referred to the IMF-supported diagnostic and governance assessment and the government’s commitment to a time-bound action plan for implementing its recommendations.

He noted that reforms related to asset declarations and public disclosure are already underway and welcomed SPDC’s views on strengthening institutional accountability and anti-corruption frameworks.

Climate change and population dynamics were also discussed as critical long-term challenges. The minister said climate change is already imposing rising economic costs through increasingly frequent extreme weather events affecting growth, agriculture and fiscal stability, and stressed the need for sustained budgetary prioritization.

On population, he said the primary challenge lies in access to services, awareness and institutional coordination rather than cultural or religious barriers.

The SPDC delegation outlined areas where the Centre could support the Ministry of Finance, including intergovernmental fiscal analysis, NFC simulation and modeling, and taxation and resource mobilization.

Particular emphasis was placed on health-related taxes, such as those on tobacco and sugar-sweetened beverages, as policy tools that can advance public health objectives while generating revenue.

Both sides reaffirmed the value of continuous engagement beyond the annual budget cycle and expressed confidence that closer collaboration would help translate evidence-based policy research into effective implementation in support of sustainable economic reform and national development.

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