Definitions Fiscal Decentralization refers to an intergovernmental system where the balance of power moves toward the subnational government sector
Intergovernmental Fiscal Relations refers generally to division of fiscal powers and responsibilities among levels of government
Advantages of Fiscal Decentralization ● Move Government closer to the people ● Broaden the Tax Base ● Allow for alternative service delivery in social services
Components of system of fiscal decentralization ● Necessary Conditions ✓ Elected Local Council ✓ Locally Appointed Chief Officers ✓ Significant Local Government Revenue Capacity ✓ Significant Local Government Expenditure Responsibility ✓ Budget Autonomy ✓ Hard Budget Constraint ✓ Transparency
Components of System of Fiscal Decentralization ● Desirable Conditions ● Freedom from Excessive Central Expenditures Mandates ● Unconditional Transfers from Higher Level Governments ● Borrowing Powers