Gradual Decay of Institutions and Lack of Reform Underlie Pakistan's Fiscal Crisis
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The corrosion of a republic is a gradual process, not a sudden event. It weakens state institutions across the board.
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The 18th Amendment and 7th NFC sought to empower the provinces fiscally. But this required difficult federal reforms that never materialized.
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The momentum for reform was derailed by terrorism, political assassinations, and changes in military leadership in the late 2000s.
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Successive federal governments since 2008 failed to make hard decisions like privatization and tax reforms. The fiscal crisis stems from this failure.
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Proposals to reverse the NFC will likely just offload the federal government's flawed “tax the poor, protect the rich” approach onto the provinces.