Berbach, M. L., Sow, M., and Taiclet, B. (2015) “Mali – Réussir la décentralisation financière”, Technical Assistance Report, IMF, January.
Caldeira, E., G. Chambas, and G. Rota-Graziosi, (2015) “Fiscalité locale et décentralisation”, Technical Assistance Report, IMF, June.
Cevik, S., F. Conway, D. Last, and J. Seiwald, (2014) “Strengthening the Fiscal Framework for Decentralization”, IMF, Technical Assistance Report.
Fisher, L., T. Irwin, and J. Pigey, (2014) “Fiscal Decentralization: Review of Grants to Local Governments and Local Financial Management”, IMF, Technical Assistance Report.
Hatfield, J. W., (2013), “Revenue Decentralization, the Local Income Tax Deduction, and the Provision of Public Goods” National Tax Journal, Vol. 66(1), pp. 97–116.
Rota-Graziosi, G., E. Caldeira, and G. Chambas, (2015) “Fiscalité locale et decentralization”, IMF, Technical Assistance Report. June.
Prepared by Moussé Sow and Milan Cuc.
For example, Bamako’s population growth has been estimated at 5.4 percent, with some of its outer areas increasing at a rate of 10–15 percent.
World Bank (2011).
A National Decentralization Policy Framework was adopted in 2005 with the key objective of increasing local governments’ responsibilities, accountability, and skills.
The decentralization ratio is calculated as the ratio of local government expenditure (revenue) to general government expenditure (revenue). In situations where local public finance information is not reliable, the decentralization ratio is calculated as the ratio of general government expenditure minus central government expenditure over general government expenditure.
In countries with regional disparities, the ability of subnational governments to provide public goods and services to residents can vary widely—which may lead to strong social and political tensions. Mali can serve as an example.
This may occur due to the lack of modern and transparent management systems.
From under 8 percent of total spending (Mexico), to 40–50 percent of total spending in loose federations (Canada, Australia, and India).
For example, in Germany, shared revenue from the VAT is apportioned on a per-capita basis, which entails a moderate degree of redistribution. In other countries, additional factors are included in calculating subnational governments’ revenue share to ensure a higher degree of redistribution in favor of poorer regions.
In Kenya the constitution envisages minimum transfers of 15 percent of “national revenues” to 47 counties. Today, the public debate has sprung about the 15 percent figure, as well as about the definition of “national revenues”.
For example, subnational governments may be prevented from borrowing. See below.
In Ethiopia, it was initially the Ministry of Finance, now it’s the second house of Parliament; in Kenya, a permanent commission that reports to Parliament; in India, a commission—in which the Ministry of Finance is represented—meets every five years to review the sharing formula.
External borrowing should be subject to tighter controls as a rule, given its macroeconomic implications.
Affected personnel must be given a reasonably long notice, so that they can make alternative plans if they are not prepared to relocate.