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

An important aspect of the fiscal relations between thefederal and provincial governments is the command over resources,expenditure responsibilities and the direction, size and form of fiscalflows between different layers of government. In most federations,revenue sources generally assigned to lower levels of governments oftenfall short of adequately fulfllling the expenditure responsibilities ofsuch governments. Given this important feature, the identification ofthe predominant central authority over the country’s resources and theimplications for public policy of the restructuring of centre-statefiscal relations to ensure balanced development of all provinces emergeas important issues. This paper documents trends in centralization forboth the expendit!lre and revenue sides of the budget, traces theevolution of revenue sharing and other federal transfers and delineatessome policy guidelines in the area of fiscal federalism for Pakistan.Intra-provincial differences have not been highlighted as the analysisis carried out at the level of all provinces.