Making Fiscal Decentralization Work: Cross-Country Experiences

Occasional Papers, October 6, 2010

Source details

Canonical URL

Making Fiscal Decentralization Work: Cross-Country Experiences

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Annalisa Fedelino
• Published: October 6, 2010
• Series: Occasional Papers
• DOI: https://doi.org/10.5089/9781589069855.084

Overview

• The book addresses what makes fiscal decentralization work for policymakers worldwide.
• Draws on relevant literature and IMF policy and technical advice provided to a wide range of member countries.
• Discusses key factors that help make decentralization sustainable, efficient, and equitable from a macroeconomic perspective.
• Focuses on institutional reforms and their appropriate sequencing suited to different country circumstances.

Key focus areas

• Revenue and expenditure assignments to different levels of government.
• Design of intergovernmental transfers.
• Public financial management (PFM) systems.

Findings and substantive points

• Decentralization’s success depends on institutional design choices tailored to country-specific circumstances.
• Sustainable, efficient, and equitable outcomes require coherent assignment of revenues and expenditures, well-designed transfer systems, and robust PFM frameworks.
• Appropriate sequencing of reforms is critical to making decentralization work.

Policy implications and recommendations

• Align revenue and expenditure assignments with subnational governments’ functional responsibilities.
• Design intergovernmental transfers to address fiscal disparities while preserving incentives for efficiency.
• Strengthen public financial management systems at all levels of government to support accountability and macro-fiscal stability.
• Sequence institutional reforms to build capacity and avoid fiscal risks during the decentralization process.