ISLAMABAD: The World Bank, in its latest report titled “Strengthening Fiscal Federalism,” has highlighted significant disparities in the distribution of development and financial resources between provincial capitals and other districts across Pakistan, warning that the imbalance is undermining human development and infrastructure progress.
According to the report, the gap is most pronounced in Balochistan, where the provincial capital Quetta receives 475% higher per capita public spending compared to other districts.
Similarly, in Punjab, Lahore receives 440% more funding, while in Khyber Pakhtunkhwa, Peshawar receives 335% higher spending. In Sindh, Karachi receives 178% more resources than other districts.
The World Bank noted that although the 2010 7th National Finance Commission (NFC) Award increased provincial resources and slightly reduced disparities compared to 2009, provincial capitals continue to receive a disproportionately large share of funding.
The report further stated that in conflict-affected Balochistan, Quetta’s significantly higher allocation contrasts sharply with persistent deprivation in other districts, where limited employment opportunities and underdevelopment remain major challenges.
It also observed that district-level budget allocations are often not based on social or economic needs such as poverty, education, health, or infrastructure gaps, resulting in wealthier districts continuing to receive more resources.
Additionally, the share of local governments in total public spending has declined from around 10% in 2005 to 4.7% in 2024, despite constitutional provisions for fiscal decentralization. The report also noted that Provincial Finance Commissions remain largely non-functional in most provinces.
In terms of outcomes, the World Bank highlighted mixed performance: Khyber Pakhtunkhwa showed relatively better education outcomes despite lower spending, while Sindh and Balochistan saw weaker improvements in enrollment and literacy despite increased expenditures.
