Fiscal Architecture-A Fetter on New Local Governments in Pakistan?

Abstract

Pakistan has created a new system of local government. It has three tiers and brings in a larger participation of people through elected councils and local political executive. This has been a major change from the old system of administration predicated on the concepts of public administration. The change provides for definitions of subsets of public policy that can align better with local preference and correspond to diversity of choices. However, the fiscal architecture as it has evolved does not provide sufficient wherewithal to local governments to provide a wider range of services or to change existing patterns in accordance with local preference. It is a constraint on local governments, which despite administrative and political change, are not being able to respond to the diversity of needs. Objectives of decentralization like improvement of service delivery cannot be achieved unless fiscal arrangements are congruous with political and administrative structures set up by decentralization.

Keywords:

• decentralization
• intergovernmental fiscal arrangements in Pakistan
• fiscal decentralization
• intergovernmental transfers

Notes

1. Amendments to the laws were inserted nearly a year after the local governments started functioning and more than eighteen months after the elected tiers came into being.

2. The study of districts involved: Kila Saifullah, Karachi, Khairpur, Bahawalpur, Faisalabad, Bannu (as part of ADB, DfID, World Bank Devolved Service Delivery study in June–August 2004), Gujranwala, Lahore, Sibbi, Jaffarabad, Nasirabad and Bolan in 2004; the article also relies on a fiscal dataset put together by the author for all the 100 districts and 360 TMAs for the same study.

5. Cyan, M. R.. The Imperative of Optimizing Institutional Framework for Development in Districts in Pakistan, Working Paper; Development Planning Unit, University College London: London, 1998.

7. Not every one thinks that the reform came about through an ongoing debate; see ICG. Devolution in Pakistan, Reform or Regression; International Crisis Group, ICG Asia Report No.77: Brussels, 2004.

11. Most of the offices have been given new names in the local governments while they continue to perform earlier functions.

13. The table is based on the Punjab Local Government Ordinance 2001.

16. Some may call it fiscal federalism; also see Ebel, B.; Yilmaz, S. Concept of Fiscal Decentralization and Worldwide Overview, World Bank: Washington DC, 2002.

26. The data are based on a sample of districts in two provinces, Baluchistan and Balochistan. It uses data from Cyan 2001 for the baseline.

29. Government of Balochistan. 2001. Balochistan Local Government Ordinance; Government of Balochistan: Quetta, 2001; Govt of NWFP. 2001. NWFP Local Government Ordinance; Government of North-West Frontier Province: Peshawar, 2001; Govt of Punjab. 2001. Punjab Local Government Ordinance; Government of Punjab: Lahore, 2001, Govt of Sindh. 2001. Sindh Local Government Ordinance; Government of Sindh: Karachi, 2001.

30. Author's interviews with NRB officials.

32. Government of Pakistan. 2004. Annual Budget Statement 2004; Ministry of Finance, Government of Pakistan: Islamabad, 2004.

33. Government of Balochistan. 2002. Annual Budget Statement; Finance Department, Government of Balochistan: Quetta, 2002; Government of Balochistan. 2003. Annual Budget Statement; Finance Department, Government of Balochistan: Quetta, 2003; Government of Balochistan. 2004. Annual Budget Statement; Finance Department, Government of Balochistan: Quetta, 2004.

34. Government of NWFP. 2002. Annual Budget Statement; Finance Department, Government of NWFP: Peshawar, 2002; Government of NWFP. 2003. Annual Budget Statement; Finance Department, Government of NWFP: Peshawar, 2003; Government of NWFP. 2004. Annual Budget Statement; Finance Department, Government of NWFP: Peshawar, 2004.

35. Government of Punjab. 2002. Annual Budget Statement; Finance Department, Government of Punjab: Lahore, 2002; Government of Punjab. 2003. Annual Budget Statement; Finance Department, Government of Punjab: Lahore, 2003; Government of Punjab. 2004. Annual Budget Statement; Finance Department, Government of Punjab: Lahore, 2004.

36. Government of Sindh. 2002. Annual Budget Statement; Finance Department, Government of Sindh: Karachi, 2002; Government of Sindh. 2003. Annual Budget Statement; Finance Department, Government of Sindh: Karachi, 2003; Government of Sindh. 2004. Annual Budget Statement; Finance Department, Government of Sindh: Karachi, 2004.

38. Cyan, M. R. 2000. Crafting the Hinges of a Decentralised State; Planning & Development Department, Government of North-West Frontier Province: Peshawar, 2000.

39. Sidat Hyder Morshed Associates (Pvt) Ltd. Punjab Local Government Finances—Financial Profiles of Selected Tehsil Municipal Administrations: Karachi, 2003.

40. Cyan, 2001.