Municipal Finance. Module 01 Intergovernmental Finances in a Decentralized World World Bank Institute Municipal Finance

In this module we provide the municipal finance practitioner both a general overview of the variants and trends of intergovernmental finance as well as a closer look at the special topic of fiscal transfers from central to local governments.

The module provides a distinction between political and fiscal decentralization, then discusses the models or variants of decentralized governance, including the legal continuum of unitary, federal and con-federal arrangements, with a lesson that the practical reality in many countries is that the intergovernmental practices are asymmetric rather than uniform throughout the country. The module summarizes the key relationships between decentralized fiscal autonomy and the accomplishment of a nation’s broader economic and fiscal objectives. It concludes with the reasons why the record for fiscal decentralization is uncertain.