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Decentralization in Pakistan

Decentralization in Pakistan
Decentralization in Pakistan

Pakistan introduced an ambitious plan to devolve political and fiscal central powers to new local governments. While there has been progress in devolving political powers, fiscal and administrative decentralization are still lagging behind.

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Key Challenges

Pakistan took a wholesale approach to decentralization. It introduced an ambitious plan to devolve political and fiscal central powers to new local governments. A devolution plan was launched by the 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, fiscal and administrative decentralization are still lagging behind.

  • - 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; and
  • - Decision-making powers need to be transferred to local governments.
  • - In December 2008, the Prime Minister constituted a committee to revisit the Local Government Ordinance, 2001, in order to remove weaknesses and improve the Local Government System.

World Bank Support

The work program on decentralization in Pakistan is in line with the CAS. The three inter-linked and mutually reinforcing pillars of the CAS correspond to the strategic priorities of the PRSP: (i) sustaining growth and improving competitiveness; (ii) improving government effectiveness and service delivery; and (iii) improving lives and protecting the vulnerable.

Featured study

As part of the Bank’s assistance to Pakistan, a comprehensive analytical study was carried out jointly with the Asian Development Bank and Department for International Development, United Kingdom, to review progress towards improving service delivery through decentralization. The study, Devolution in Pakistan, provided a framework to evaluate service delivery under the new devolution reform process.

More analytical studies on Pakistan


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