Implementation rules for fiscal dec·entralization

TLDR

Fiscal decentralization is a comprehensive system that requires strong central monitoring, local taxing powers, and tailored intergovernmental arrangements for both urban and rural sectors. The paper proposes that central governments should establish clear, simple fiscal decentralization rules, enforce hard budget constraints, design intergovernmental transfers to align with reform goals, involve all three government levels, and appoint a champion to guide the transition.

Abstract

Rule #1 Fiscal decentralization should be viewed as a comprehensive system.Rule #2 Finance follows function.Rule #3There must be a strong central ability to monitor and evaluate decentralization. Rule #4 One intergovernmental system does not fit the urban and the rural sector. Rule #5 Fiscal decentralization requires significant local government taxing powers. Rule #6 Central governments must keep the fiscal decentralization rules that they make .Rule #7 Keep it simple. Rule #7 Keep it simple. Rule #8 The design of the intergovernmental transfer system should match the objectives of the decentralization reform .Rule #9 Fiscal decentralization should consider all three levels of government. Rule #9 Fiscal decentralization should consider all three levels of government. Rule #10 Impose a hard budget constraint. Rule #11 Recognize that intergovernmental systems are always in transition and plan for this. Rule #12 There must be a champion for fiscal decentralization .