Issues in Fiscal Governance: A Case of Pakistan

Abstract

Studies conducted on the governance in federal states have varying results for the developed and the developing countries. While the Federalism has successfully addressed the issues of accountability, decentralization and the government performance in developed sates, it remains an issue in the countries of the South including Pakistan. Political leadership has failed in pursuit of the goals of revenue collection and carrying out development and social service program. Resultantly, Pakistan’s economy faces problems like ever increasing budget deficits, public debt and inflation. The lack of accountability and the capacity gap in revenue and expenditure needs have raised question over the structure of federalism. This paper argues that issues facing management in the government structure has been the denial to people as part of the decision-making process in democratic dispensation at the lower echelon of the state structure. As far as the objectives of the study are concerned, an effort has been made to identify the key components of fiscal governance in Pakistan, assessing the effectiveness of fiscal institutions, analyzing the impact of fiscal policy on economic growth and stability and examining the challenges in revenue generation. A descriptive-analytical method has been adopted to carry out this research work. Lastly, there is need to develop a policy by ensuring regular elections at the local level with clear rules about the terms and tenure of the elected representative elected representatives will know that their mandate and term of office will directly depend on local voters.