THE landmark 18th Amendment and seventh NFC Award radically reshaped Pakistan’s fiscal federalism by transferring greater powers and financial resources to the provinces so that authority would eventually flow closer to citizens through local governments.

Sixteen years later, a new World Bank report, Strengthening Fiscal Federalism in Pakistan, has concluded that while the constitutional framework remains sound, its implementation has been patchy and ineffective. The federal government continues to run deficits because transfers to the provinces increased without a corresponding reduction in federal expenditure, or increase in the tax-to-GDP ratio. Islamabad still spends in devolved sectors, creating duplication and weakening fiscal discipline.

© Dawn