Implementation Rules For Fiscal Decentralization

Rule #1 Fiscal decentralization should be viewed as a comprehensive system.Rule #2 Finance follows function.Rule #3There must be a strong central ability to monitor and evaluate decentralization.Rule #4 One intergovernmental system does not fit the urban and the rural sector. Rule #5 Fiscal decentralization requires significant local government taxing powers.Rule #6 Central governments must keep the fiscal decentralization rules that they make .Rule #7 Keep it simple. Rule #8 The design of the intergovernmental transfer system should match the objectives of the decentralization reform .Rule #9 Fiscal decentralization should consider all three levels of government. Rule #10 Impose a hard budget constraint. Rule #11 Recognize that intergovernmental systems are always in transition and plan for this. Rule #12 There must be a champion for fiscal decentralization .