This public financial management introductory guide defines fiscal decentralisation and discusses how it fits into a country’s wider decentralisation policy. It outlines the reasons why decentralisation is usually undertaken in developing countries and how the administrative, political and fiscal mandates of decentralised government need to be considered jointly in what is usually a longterm change process.
This introductory guide also discusses the role of central government in a decentralised system as well as the typical challenges and opportunities that emerge in decisions about financing local governments. It also highlights the importance of carefully sequencing and staging the reform process.
This introductory guide is also available in French.