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Fiscal Implications of the 18th Amendment : The Outlook for Provincial FinancesFollowing the transition to democracy in
 2008, two very important political developments took place.
 These were the announcement of the 7th National Finance
 Commission Award, which was agreed upon in December 2009 in
 Lahore, Pakistan, and the unanimous ratification by
 Parliament of the 18th Amendment to the Constitution in
 April 2010. Both developments have the potential of
 fundamentally restructuring the way Pakistan is governed in
 the future. This paper is divided into four sections. The
 first provides a quick overview of the 18th Amendment and
 Its Major Fiscal Implications on Provincial Governments,
 including new functional responsibilities and institutions
 and financing of new responsibilities. The 18th Amendment
 brought important institutional changes and the fiscal
 powers of the provinces have been enhanced. As a result,
 the 18th Amendment will lead to a more balanced and
 decentralized structure of government of Pakistan and to an
 enhanced empowerment by the provinces. The second section
 provides an outlook for provincial finances and trends in
 fiscal variables and discusses borrowing and debt levels and
 ways to raise provincial resources. Under the 18th
 Amendment, the provinces now have greater access to domestic
 or foreign borrowing, but this has to be carefully
 monitored. The third section focuses on the potential for a
 new revenue sharing system and fiscal rules, including
 revenue sharing arrangements and exploring fiscal rules for
 provincial governments. The final section identifies a
 potentially large set of pending emerging issues. These are
 related to: devolution of particular functions; the
 distribution of assets/liabilities and flow of income;
 implications of the joint and equal ownership of natural
 resources by federal and provincial governments; impact of
 the 18th Amendment on the planning process; the future role
 of local governments; and the overall implications of
 decentralization on growth.
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Sub-National Performance Incentives in the Intergovernmental FrameworkThis paper provides background for the
 Government of Indonesia as it considers if and how to
 introduce more robust local government performance
 incentives into the intergovernmental fiscal framework. The
 next section briefly examines the forces that have driven
 the recent national wave of interest in improving local
 government performance. This is followed by a review of the
 relatively limited set of local government performance
 incentives currently in force in Indonesia. The fourth
 section provides a conceptual overview of how to think about
 the possible expansion of local government incentive
 programs, outlining the potential role(s) of such programs
 in general and the key issues involved in designing and
 implementing them. The fifth section tentatively considers a
 number of options for additional local government incentives
 in Indonesia that the central government may wish to
 consider pursuing. The paper concludes with an outline of
 next steps for moving forward with the possible development
 of more purposeful and meaningful performance incentives in
 Indonesia's intergovernmental fiscal framework.
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Service Delivery and Decentralization in Sri Lanka : Assessment and OptionsThis report assesses Sri Lanka's
 experience with decentralization to date and discusses
 options for decentralization and implications for service
 delivery in three sectors: roads, solid waste and health.
 The selected sectors illustrate the considerations relevant
 to the decentralization decision and its future direction.
 The services selected cover a range of central, provincial
 and local responsibilities in delivery and illustrate how
 the cause of success or failure of service delivery is
 rooted in the institutional framework, division of
 responsibility, funding mechanisms i.e. incentives and
 accountability. The effective provision of these services
 requires a clear understanding of the service delivery
 goals, technical capacity, adequate assets and recurrent
 inputs to deliver services. Each sector has its particular
 needs and to some extent can be considered independently,
 but the political realities effectively require that any
 constitutionally mandated and elected level of government
 have some corresponding responsibilities.