Downsizing a bloated government

Under the International Monetary Fund’s (IMF) influence, the federation and the provinces have committed to taking appropriate measures to remove distortions in fiscal federalism. Provincial revenues are to be significantly improved while renewed efforts are made to balance federal and provincial spending. Though it is a challenging agenda, as past experience shows, one expects that serious efforts will be made this time by the authorities to honour their commitment to the Fund. For this year, the provinces are required to produce surpluses in excess of Rs1.215 trillion, says the former governor of the State Bank Shahid Kardar. He argues: “Why would they accede to such a ridiculous demand to generate surpluses for Islamabad to spend?”