BRIEF

Decentralization and Intergovernmental Relations

June 18, 2015

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Poti Port. Georgia

© Yuri Mechitov / World Bank


 

OVERVIEW

In recent decades, the decentralization of resources and decision-making has strengthened the role of subnational governments (SNGs) in promoting growth and shared prosperity. On the revenue side, SNGs are increasingly involved in resource mobilization (including local taxation). On the expenditure side, SNGs have broadened and deepened their responsibilities for service delivery related to water and sanitation, health, education, and  infrastructure, as well as local economic development. For SNGs to successfully deliver on their mandates, effective intergovernmental systems in fiscal, political and administrative areas are required. The strengthening of intergovernmental systems is integral to many World Bank Group (WBG) operations and the success of these efforts is critical to the WBG and its clients.

 

OBJECTIVES

The Decentralization and Intergovernmental Relations Global Solutions Group (GSG) is concerned with a broad range of topics related to intergovernmental systems. These fall primarily under three work streams: institutional and fiscal frameworks; improving the capacity of SNGs; and support for service delivery and frontline providers. Our goal is to provide a platform for WBG staff and partners working on these issues to exchange experiences and to deepen their knowledge. 

Key activities of the Decentralization and Intergovernmental Relations GSG include:

a) Providing in-depth training on core issues of intergovernmental finance, to enhance skill development, technical expertise and professional networking opportunities among staff. The GSG offers regionally targeted learning on demand as well as “blended learning” for Bank staff and practitioners to simultaneously support practitioners and develop staff skills in an open learning environment;

b) Support to operational teams working on these issues through cross support, technical advice, peer reviews, quality enhancement reviews, etc.;

c) Managing analytical work to enhance the global knowledge base and inform operations on intergovernmental fiscal issues;

d) Gathering information on decentralization and intergovernmental finance from both within and outside the WBG, and disseminating this through the GSG’s website, newsletter and events; and

e) Leading the WBG’s engagements with external partners through the Development Partners Working Group on Decentralization and Local Governance (DeLoG), which includes 28 bilateral and multilateral partners.

PROGRAMMING

During FY12-14, the WBG’s worldwide portfolio contained 159 decentralization-specific projects. The percentage of commitments dedicated to decentralization averaged 8.2 percent, with a total commitment of $3.65 billion in FY14. Substantial economic and policy work has been undertaken.

Fiscal and Institutional Frameworks

The GSG supports efforts to ensure that intergovernmental fiscal frameworks promote effective service delivery across territorial units by addressing issues such as revenue and expenditure assignments, intergovernmental fiscal transfers and sustainable subnational debt.

Subnational Government Strengthening

To help strengthen subnational governments, the GSG is active in the areas of:

a) Building core institutional capacities related to administrative areas including human resources, public financial management and procurement;

b) Increasing transparency in subnational financial management through increased standardization and harmonization of accounting and reporting by using tools such as  Integrated Financial Management Information Systems (IFMIS) spanning across levels of government; and

c) Promoting performance and results-based management which requires increased decision-making autonomy and a more effective public sector machinery.

Service Delivery and Frontline Providers

In the sectors, the GSG promotes:

a) Sector governance arrangements for improved service delivery, which helps strengthen organizational and institutional arrangements between sector entities and frontline providers such as schools and hospitals;

b) Improving public investment management to strengthen the efficiency of infrastructure delivery at the subnational level, in the context of fiscal consolidation;

c) Mobilizing resources for financing services, which involves service financing approaches that are complementary to intergovernmental fiscal flows; and

d) Citizen monitoring and accountability arrangements, such as putting in place measures for bottom-up monitoring of service delivery.

GLOBAL KNOWLEDGE

The Bank’s portfolio of Economic Sector Work and Technical Assistance related to decentralization and intergovernmental relations is steadily increasing. Some examples of recent global knowledge products include:

a) Decentralization, intergovernmental fiscal relations and city finance reports covering: China, Ethiopia, Georgia, Kenya, Moldova, Mongolia, Nigeria, Pakistan, Romania, and Vietnam;

b) The book Until Debt Do Us Part, covering subnational debt, insolvency and credit market development in over 20 countries including Brazil, Russia, India, China, and South Africa (BRICS), Colombia, Hungary, Mexico, and the Philippines;

c) Reports on intergovernmental fiscal relations  in fragile and conflict situations covering Burundi, Myanmar, Somalia, the Philippines, Ukraine, and Yemen;

d) Medium-term fiscal frameworks for addressing growth uncertainty and evolving  intergovernmental fiscal arrangements in the post-global financial crisis in countries such as Brazil, China, Mexico, Poland, and Serbia.