Developing the institutional framework for intergovernmental fiscal relations in decentralizing LDCs

Decentralized countries around the world use different institutional set-ups to assure that the system of local government finances achieves the objectives sought by the public sector through the decentralized delivery of public services. In many centralized countries, the Ministry of Local Government is tasked with the exclusive responsibility to monitor and coordinate all aspects of intergovernmental relations, including local government finances. While the Ministry of Local Government generally also plays a role in more decentralized countries, it is not unusual for broad-based or inter-ministerial commissions to be tasked with tracking and considering local government finance issues in more decentralized countries. In contrast, other decentralized countries rely more heavily on local government associations or even the legislative branch to monitor and analyze the system of local government finances and to represent local government interests at the national level to assure a balanced system of intergovernmental relations. Finally, there are a small number of decentralized countries around the world that lack a formal intergovernmental mechanism to coordinate local government finance issues altogether.