Decentralization and Public Financial Management in the Health Sector: A Case Study of Pakistan

Abstract

Decentralization is widely promoted as a governance reform to improve efficiency, accountability, and responsiveness in public service delivery, particularly in the health sector. In Pakistan, the 18th Constitutional Amendment of 2010 marked a significant shift in governance by devolving health sector responsibilities from the federal government to provincial governments. This reform substantially transformed Public Financial Management (PFM) arrangements in the health sector, affecting budgeting, expenditure control, and accountability mechanisms. This paper examines the impact of decentralization on health sector PFM in Pakistan by situating the reform within broader theoretical and empirical literature. It analyzes changes in health financing, governance, and service delivery outcomes while identifying persistent institutional and fiscal challenges. The study argues that although decentralization has enhanced provincial autonomy and policy responsiveness, weaknesses in public financial management capacity, coordination, and equity continue to limit its effectiveness. Strengthening PFM systems is therefore essential for translating decentralized governance into improved health outcomes in Pakistan.