BARELY had the dust settled on the IMF’s insipid report on governance than the World Bank launched, with much fanfare, its latest prescription — this time on fiscal federalism. The bank’s report presents itself as a fresh diagnosis of Pakistan’s malfunctioning intergovernmental system, when actually there is little that is either new or thought-provoking about it.

In fact, the report comes across as an overwhelmingly technocratic exercise. It catalogues institutional weaknesses, distils lessons from selected federations and decentralised systems, and recommends clearer expenditure assignments, stronger provincial revenue mobilisation, NFC Award reforms, more transparent fiscal transfers, effective intergovernmental coordination and empowered local governments (LG). In principle, few would disagree. The problem is that the report treats the recommendations as technical solutions to what are essentially political problems, thus displaying only a superficial appreciation of Pakistan’s political economy, the constitutional agreement underpinning federal-provincial ties and the political bargaining that has shaped the country’s fiscal architecture. Its framework assumes that improved technical arrangements can create the political conditions necessary for their success. In reality, these conditions are prerequisites, not outcomes, of institutional reform. Political incentives shape institutions, not vice-versa.

The report rightly criticises Islamabad’s lavish spending on devolved subjects, resulting in wasteful duplication, blurred accountability and widening fiscal imbalances. Yet it hardly examines the incentives that extend this encroachment into provincial domains. The answer lies not in administrative confusion but in the political economy: preserving patronage networks, protecting bureaucratic........

© Dawn