IN the immediate post-election scenario, various political parties were in a position to form the government in the provinces, whereas none was in a position to do it at the federal level. The fact is that there was a phase in which every political party expressed the desire to sit in the opposition. Why? Looking at it through an economic lens, the situation was not surprising.

Undoubtedly, after the implementation of the 18th amendment, the provinces are extremely better off in terms of receiving funds from the centre without any compulsive contribution to the exchequer. In contrast, the federation is bankrupt at the expense of funding the provinces, while also carrying the heavy burden of both local and foreign debts, fulfilling the country’s defence needs, and running loss-making state-owned enterprises (SOEs) through subsidies.

Things being what they are, it makes sense for political parties to remain active in the provinces, and let someone else do the hard yards in Islamabad.

Things surely need to be reversed as early as possible to avert the worsening political and economic crises. Unfortu-nately, the provinces have proved to be more inefficient than the federal government in utilising public funds since the implementation of the 18th amendment well over a decade ago. The persistent flows from the divisible pool have further added to the country’s fiscal woes.

The first key reform to restore our fiscal balances once the new setup takes office should be related to the 18th Amend-ment. Until the fiscal side is corrected, nothing can be shaped appropriately.

Shahzad Mithani
Karachi

Published in Dawn, February 25th, 2024