1rends and Patterns in Federal-Provincial Fiscal Flows in Pakistan: A Preliminary Analysis

Abstract

An important aspect of the fiscal relations between the federal and provincial governments is the command over resources, expenditure responsibilities and the direction, size and form of fiscal flows between different layers of government. In most federations, revenue sources generally assigned to lower levels of governments often fall short of adequately fulfllling the expenditure responsibilities of such governments. Given this important feature, the identification of the predominant central authority over the country's resources and the implications for public policy of the restructuring of centre-state fiscal relations to ensure balanced development of all provinces emerge as important issues. This paper documents trends in centralization for both the expendit!lre and revenue sides of the budget, traces the evolution of revenue sharing and other federal transfers and delineates some policy guidelines in the area of fiscal federalism for Pakistan. Intra-provincial differences have not been highlighted as the analysis is carried out at the level of all provinces.