Unformatted text preview: ticipation •Increased Living Standards
• Administrative Capacit
• Admin. Accountability
• Admin. Transparency •Growth of Civil Society TIME Source: Adapted from Parker, Andrew N. 1995,
"Decentralization: The Way
Forward for Rural Development?"Policy Research Working Paper 1475. The World Washington, D.C.
Bank, There is no easy answer to the question of how to design a decentralization strategy to promote transparency,
accountability, and efficiency in intergovernmental financial system. Ideally the intergovernmental fiscal system should
function leaving little room for ambiguity and negotiations among different levels of government. Therefore, an important
component of a decentralization strategy is designing a legal and regulatory framework that would provide guidance to
different levels of government in sorting out the roles and responsibilities.
In the process of decentralization, the constitution should enshrine the broad principles on which decentralization is to
operate, including rights and responsibilities of all levels of government, the description, and role of key institutions at
central and local levels, and the basis on which detailed rules may be established or changed (Ford, 1999). The specific
parameters of the intergovernmental fiscal system and the institutional details of the local government structure must be
defined in the laws governing relations across governments. Ford (1999) lists the issues that the legal framework of
reform efforts should address as: 160 Commission on Fiscal Imbalance ♦ Classification of local governments within tiers established under the constitution; ♦ Broad organization structures and their roles and responsibilities; ♦ Terms of office, operating powers, procedures, and limitations of the political leadership, as distinct from the civil service; ♦ The degree of autonomy of personnel policies and administration of local governments; ♦ The taxing and fiscal administration authority of local governments; ♦ The borrowing authority and capacities of local governments; ♦ The distribution of budgeting, expenditure management, accounting, auditing, and reporting requirements; ♦ Service provision and delivery authority; ♦ The mechanisms for citizen participation and voice. 5. FOUR PILLARS OF INTERGOVERNMENTAL FISCAL SYSTEM
The design of a decentralized system requires "sorting-out" of public sector responsibilities among different types of
governments and the process of sorting out entails transfer of some decision-making powers from central to subnational
governments (Ebel, Varfalavi and Varga, 2000). Ideally, to achieve the relevant policy objectives, intergovernmental
fiscal system should be designed based on each country’s specific circumstances. The policy objectives should include
not only the public finance goals of efficiency, transparency, and accountability but also should aim at maintaining
national integrity and political stability and being equitable to different people and places. Such a design is based on...
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