ISLAMABAD, JAN 31 (DNA) – Pakistan has been directed by International Monetary Fund (IMF) to make substantial changes to the National Finance Commission (NFC) award.

The Washington-based lender said it recommended these measures due to severe pressure on the governments finances and major macroeconomic imbalances arising due to its enforcement.

IMF suggested the authorities to establish a technocratic financial council under supervision of Council of Common Interest (CCI). Also, it recommended the setting up of contingency fund under aegis of provincial and provincial governments.

Also, the Washington-based lender sought the establishment of a permanent national tax commission which would help in increasing the tax net. All these proposals have been put forth in IMF’s Article-IV review of the country’s economy which will hopefully be approved next week by its executive board.

The forthcoming IMF Article-IV report once approved has criticized the 7th NFC Award for having been lopsided and less flexible, which restricted the governments ability to resolve macroeconomic imbalances and vulnerabilities.

Because of this, the government failed in fully exploiting the revenue sources which caused the government in getting any cushion to address any probable economic shocks in the short-term.

IMF cautioned in tumultuous situations, these weaknesses could impact macroeconomic stability and advocated for design aspect modifications in financial framework of the 9thNFC award.

It added the forthcoming NFC award should focus on reinforcing macroeconomic stability and improve efficiency, responsiveness and flexibility of financial framework.

IMF’s report said constitutional parameters restrict the options for change, but improvements can be examined in existing legal framework. It added, these improvements must take into consideration the expected outcome from the expected 9th NFC award on public debt, nation-wide efficiency of public expenditure across all levels of government and effectiveness of fiscal policy.