Pakistan made 'meaningful' progress in fiscal federalism, but deviations remain: WB

Pakistan has made substantial strides in fiscal federalism since 2010, yet significant challenges remain, a new World Bank report indicates. While acknowledging "meaningful" progress, the report highlights ongoing deviations from international standards and best practices, especially concerning the transfer of funds between federal and provincial governments. The World Bank's study, titled "Strengthening Fiscal Federalism in Pakistan," identifies four critical areas where the country falls short. One major concern is the incomplete implementation and inadequate definition of expenditure assignments. The report points out that the government continues to operate in areas constitutionally devolved to provinces, a practice that contributes to inefficiency and obscures accountability. This persistence in devolved domains, despite the 18th Constitutional Amendment, creates confusion and hinders the effective functioning of local governments.

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First, expenditure assignments remain incompletely implemented and inadequately defined in some areas.