Fiscal Implications of the 18th Amendment : The Outlook for Provincial Finances

Following the transition to democracy in 2008, two very important political developments took place. These were the announcement of the 7th National Finance Commission Award, which was agreed upon in December 2009 in Lahore, Pakistan, and the unanimous ratification by Parliament of the 18th Amendment to the Constitution in April 2010. Both developments have the potential of fundamentally restructuring the way Pakistan is governed in the future. This paper is divided into four sections. The first provides a quick overview of the 18th Amendment and Its Major Fiscal Implications on Provincial Governments, including new functional responsibilities and institutions and financing of new responsibilities. The 18th Amendment brought important institutional changes and the fiscal powers of the provinces have been enhanced. As a result, the 18th Amendment will lead to a more balanced and decentralized structure of government of Pakistan and to an enhanced empowerment by the provinces. The second section provides an outlook for provincial finances and trends in fiscal variables and discusses borrowing and debt levels and ways to raise provincial resources. Under the 18th Amendment, the provinces now have greater access to domestic or foreign borrowing, but this has to be carefully monitored. The third section focuses on the potential for a new revenue sharing system and fiscal rules, including revenue sharing arrangements and exploring fiscal rules for provincial governments. The final section identifies a potentially large set of pending emerging issues. These are related to: devolution of particular functions; the distribution of assets/liabilities and flow of income; implications of the joint and equal ownership of natural resources by federal and provincial governments; impact of the 18th Amendment on the planning process; the future role of local governments; and the overall implications of decentralization on growth.

Bibliographic Details

Main Author:	Pasha, Aisha Ghaus
Language:	English en_US
Published:	World Bank, Washington, DC 2011-11
Subjects:	ACCOUNTING, ADMINISTRATIVE CONTROL, AGRICULTURAL INCOME, AGRICULTURAL INCOMES, ARREARS, BANK LOANS, BINDING CONSTRAINT, BONDS, BORROWINGS, BUDGET BALANCE, BUDGET CONSTRAINT, BUDGET DEFICIT, BUDGETARY ALLOCATIONS, BUOYANCY COEFFICIENT, CAPACITY BUILDING, CAPITAL GAINS, CAPITAL MARKET, CAPITAL MARKETS, CASH BALANCES, CENTRAL CITIES, COLLATERALIZATION, COMMODITY PRICES, CONTINGENT LIABILITIES, CREDIBILITY, CREDITORS, CREDITWORTHINESS, CURRENT EXPENDITURES, DEBT BURDEN, DEBT LEVELS, DEBT PAYMENTS, DEBT SERVICING, DECENTRALIZATION, DEFICITS, DEVELOPMENT COMPANY, DEVELOPMENT EXPENDITURES, DEVOLUTION, DISTRICT, DOMESTIC MARKET, ECONOMIC SYSTEM, EFFICIENCY GAINS, EFFICIENT DELIVERY OF SERVICES, EMPLOYEE, EMPOWERMENT, EQUITY GROUNDS, EXPENDITURE, EXPENDITURE NEEDS, EXPENDITURES, EXTERNAL DEBT, FEDERAL BUDGET, FEDERAL EXPENDITURE, FEDERAL FINANCE, FEDERAL FUNDING, FEDERAL GRANTS, FEDERAL INCOME TAX, FEDERAL LAWS, FEDERAL MINISTRY, FEDERAL REVENUE, FEDERAL REVENUE SHARING, FEDERAL TAX, FEDERAL TRANSFERS, FINANCIAL LIABILITIES, FINANCIAL MANAGEMENT, FISCAL DECENTRALIZATION, FISCAL DEFICIT, FISCAL DISCIPLINE, FISCAL EFFORT, FISCAL IMPACT, FISCAL MANAGEMENT, FISCAL PERFORMANCE, FISCAL POLICY, FISCAL RESPONSIBILITY, FISCAL SPACE, FISCAL TRANSFERS, FISCAL VARIABLES, FLOW OF FUNDS, FOREIGN DEBT, GOVERNMENT BUDGET, GOVERNMENT BUDGET DEFICIT, GOVERNMENT EMPLOYEES, GREATER ACCESS, HOUSING, HUMAN CAPITAL, HUMAN RESOURCE, HUMAN RESOURCE REQUIREMENTS, IMMOVABLE PROPERTIES, IMMOVABLE PROPERTY, INCOME TAX, INFLATION, INFLATION RATE, INTEREST PAYMENTS, INTERGOVERNMENTAL TRANSFERS, INTERNATIONAL BANK, LAND OWNERSHIP, LEVEL OF DEBT, LEVEL OF GOVERNMENT, LEVIES, LEVY, LOCAL GOVERNMENT, LOCAL GOVERNMENTS, MARKET BORROWING, METROPOLITAN CITIES, MINISTRIES OF EDUCATION, MINISTRY OF COMMERCE, MONETARY FUND, NATIONAL FINANCE, NET REVENUE, NET REVENUES, OUTSTANDING DEBT, OVERDRAFT, PARTICULAR DEBT, PENALTY FOR DEFAULT, PENSIONS, PEOPLES, PHYSICAL ASSETS, POLICY INSTRUMENT, POLITICAL ECONOMY, PORTFOLIO, PORTFOLIOS, PROPERTY TAX, PROVINCE, PROVINCES, PROVINCIAL BANKS, PROVINCIAL BOUNDARIES, PROVINCIAL BUDGET, PROVINCIAL BUDGETS, PROVINCIAL DEBT, PROVINCIAL DEPARTMENTS, PROVINCIAL DEVELOPMENT, PROVINCIAL EXPENDITURES, PROVINCIAL FINANCE, PROVINCIAL FINANCES, PROVINCIAL FISCAL, PROVINCIAL GOVERNMENT, PROVINCIAL GOVERNMENTS, PROVINCIAL LEVEL, PROVINCIAL OFFICIALS, PROVINCIAL RESOURCES, PROVINCIAL REVENUES, PROVINCIAL TAX, PROVINCIAL TAX REVENUES, PROVINCIAL TAXES, PUBLIC DEBT, PUBLIC EXPENDITURE, PUBLIC FINANCES, PUBLIC POLICY, REAL ESTATE, RECEIPT, RECEIPTS, RECURRENT EXPENDITURE, REGULATORY AUTHORITIES, REGULATORY FRAMEWORK, RETURN, RETURNS, REVENUE AUTHORITY, REVENUE GAINS, REVENUE MOBILIZATION, REVENUE SHARING, REVENUE SHARING FORMULA, REVENUE SHARING SYSTEM, REVENUE SHORTFALL, REVENUE SOURCES, REVENUE TRANSFERS, SAVINGS, SELF-FINANCING, SOCIAL WELFARE, STAMP DUTIES, STAMP DUTY, STATE BANK, STATE GOVERNMENT, STATE GOVERNMENTS, STRUCTURAL REFORMS, SUB-NATIONAL, SUB-NATIONAL GOVERNMENTS, SUBNATIONAL, SUBNATIONAL DEBT, SUBNATIONAL GOVERNMENTS, TAX, TAX ADMINISTRATION, TAX BASE, TAX BASES, TAX BURDEN, TAX COLLECTION, TAX LIABILITY, TAX PAYMENT, TAX POLICY, TAX RATES, TAX REFORMS, TAX REVENUE, TAX REVENUES, TAX SYSTEM, TAXATION, TAXES ON PROPERTY, TAXPAYER COMPLIANCE, TECHNICAL ASSISTANCE, TOTAL DEBT, TOTAL EMPLOYMENT, TOTAL EXPENDITURE, TOWNS, TRANSACTION, TRANSPARENCY, WATER SUPPLY, WELFARE STATE, WELFARES, WOMAN,
Online Access:	http://documents.worldbank.org/curated/en/2011/11/19406865/fiscal-implications-18th-amendment-outlook-provincial-finances https://hdl.handle.net/10986/18707
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