Causal chain · Public Administration · Economics
Fiscal federalism → expenditure alignment → state capacity
- Fiscal federalism
- expenditure alignment
- state capacity
Core logic: Revenue, spending assignments, tax base and administration must align.
Evidence in this chain
Provincial revenues averaged about 6.5% of GDP during 2010-2024, up from under 4%, while federal expenditures did not de (2010-2024)World BankMore than 80% of provincial expenditure in FY2023 was recurrent; district allocations often followed historical patterns (FY2023)World BankAgriculture was about 24.6% of value added while its effective tax rate was around 0.3% in the cited IMF assessment. (2026)IMFTotal tax revenue including provincial taxes and PDL reached 12.3% of GDP in FY2025. (FY2025)IMFPakistan's FY2025 tax ratio remained below the 25th percentile of peer countries. (FY2025)IMFIMF/World Bank research identifies roughly 15% of GDP in tax revenue as an important state-capacity reference threshold, (2026)IMF/World BankPakistan's 12.3% FY2025 tax ratio was roughly 2.7 percentage points below the 15% reference threshold. (FY2025)IMFIMF governance diagnostic identifies complex/overlapping regulations, discretionary enforcement and limited transparency (2025)IMFIMF diagnostic identifies state ownership/control in important sectors as creating rent-seeking/regulatory-capture vulne (2025)IMFIMF identifies opaque tax systems, weak oversight and customs vulnerabilities as corruption risks. (2025)IMFIMF identifies weak procurement controls, inefficient public investment management and SOE-management problems. (2025)IMFPakistan met 5 of 6 structural benchmarks in relevant IMF review, including governance-plan publication and FBR reforms. (2026)IMFProvincial agricultural income-tax regimes were amended, applying to income from 1 Jan 2025. (2025)IMFFBR priorities include taxpayer audits, digital invoicing, production monitoring and internal governance. (2026)IMF