SDPI’s research and policy engagement have contributed to a major World Bank assessment of Pakistan’s fiscal federalism framework.
The World Bank’s 2026 report, Strengthening Fiscal Federalism in Pakistan, acknowledges that it draws on consultations convened and background papers prepared by the Sustainable Development Policy Institute (SDPI).
The report examines how public resources are raised, distributed and spent across Pakistan’s federal, provincial and local tiers of government. It assesses the country’s fiscal federalism arrangements against international practice, examines their effects on fiscal sustainability and public service delivery, and sets out options for reform, including in the context of a future National Finance Commission Award.
SDPI’s contribution reflects its role in connecting independent research with some of Pakistan’s most consequential economic and governance debates. Through background research and consultations, SDPI helped bring evidence, stakeholder perspectives and policy analysis into a wider assessment of how Pakistan finances government and delivers public services.
The World Bank report identifies several structural challenges, including mismatches between expenditure responsibilities and financing, fragmentation of the tax system, weaknesses in federal-provincial transfer arrangements, limited fiscal space for local governments, and disparities in public spending and service delivery.
It also highlights the importance of better alignment between functions, financing and accountability across different levels of government — an issue with direct consequences for fiscal stability, education, health, employment and local service delivery.
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