New Provinces Could Cost Pakistan Rs. 730 Billion Annually: Report

A private think tank has cautioned that transforming Pakistan's administrative divisions into provinces could impose an annual financial burden of up to Rs. 730 billion, according to a recent report by the Policy Research Institute of Market Economy (PRIME). The report examined two provincial restructuring scenarios: one where Punjab is divided into three provinces, and another where all existing administrative divisions become separate provinces.

Under the first scenario, the annual cost would range from Rs. 46.9 billion to Rs. 56.2 billion, while the 30-province scenario could cost between Rs. 609.2 billion and Rs. 730.3 billion. PRIME emphasized that the report's focus was on the fiscal implications rather than the potential benefits of improved governance or public services.

The analysis used 2023 census data to estimate the recurring costs of operating new provinces, which could range from Rs. 22.4 billion to Rs. 25.9 billion. Under a fiscal sustainability benchmark of 10%, 11 of the 30 proposed provinces would require more than one-third of their National Finance Commission (NFC) allocation to cover core government expenses.