New Administrative Units in Pakistan: An Economic and Financial Context of the Debate

This analysis by Zafar ul Hasan Almas, former Joint Chief Economist and Senior Research Associate, IPS, and Dr. Asim Ehsan, Senior Research Officer, IPS, examines the economic and financial implications of creating new provinces or administrative units in Pakistan. The policy insight focuses on five key considerations: resource-transfer mechanisms, the cost of new governance structures, tax administration and the divisible pool, borrowing and contingent liabilities, and the timing of reform. It argues that while smaller and more responsive units may improve governance, Pakistan’s current economic constraints require careful sequencing, research-based planning, institutional consultation, and gradual consensus before any restructuring is undertaken.