Pakistan has taken a wholesale approach to decentralization. It introduced an ambitious plan to devolve political and fiscal central powers to new local governments. Pakistan's social indicators are lower than other countries with similar per capita income. That means that improving service delivery is a pressing task for the government, and devolution can help.
Pakistan’s ambitious devolution plan was launched by National Reconstruction Bureau, and during the short period of time (18-month from March 2000 to August 2002), the country created three levels of new local governments - districts, Tehsils (urban and rural municipal administrations including city towns), and Union Councils. Provincial finance commissions have been established in all four provinces to design their own transfer system.
While there has been progress in devolving political powers, decentralizing fiscal and administrative controls requires furthermore work.
The fiscal transfer system from central government to local governments needs to be improved.
Funding for the local governments needs to be strengthened.
The designs of the provincial transfer system need further improvements particularly to ensure equalization.
Decision-making powers need to be transferred to local governments.
As districts gain more responsibilities for public services, they must be given the financial means to pay for them. The World Bank is assisting the country in implementing the devolution strategy, and has undertaken a comprehensive analytical study jointly with the Asian Development Bank and Department for International Development, United Kingdom, reviewing progress towards improving service delivery through decentralization. The study, Devolution in Pakistan, provides a framework to evaluate service delivery under the new devolution reform in place in the country. Further, it presents the emerging lessons and implications for both policy and operational practices in service delivery.
The Bank also finances structural adjustment projects to support the reform in provinces by strengthening provincial governance, devolution of responsibilities, financial management and civil service reforms.
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