Fiscal Federalism and Decentralization


The role of the national (federal) government in setting the policy framework providing for common legal, social, economic and other guarantees from state to state and region to region. This role can be exercised through several mechanisms including: fiscal and funding policies, the exercise of the Constitutional authorities or the ability to convene sub-national governments and other stakeholders in a national dialogue on issues and the search and adoption of national solutions.
Through courses, conferences, seminars and other learning activities, the IOG helps Iraqi leaders develop a common understanding of the concepts and principles which underpin fiscal federalism and the skills and competencies they must have to operate effectively in a federal environment.


The allocation of the financial means between levels of government that enables each to operate and provide services to citizens in accordance with their constitutionally defined powers. This objective is typically achieved through transfers of funds between levels of government, the allocation of fiscal capacity (i.e. revenue powers) commensurate with constitutional responsibilities, or a combination of both.
Through the IOG's core training program and other learning activities, Iraqi leaders explore options for transferring funds and taxing powers from the GOI and KRG to the governorates. As well, IOG staff work directly with elected leaders and senior officials in Baghdad, Erbil and the governorates to design and implement agreements for transferring funds to support decentralized program delivery.

Intergovernmental coordination

The existence of formal or informal mechanisms by which governments manage their relationships in given program or policy areas. Intergovernmental coordination enables governments to focus their interventions in a manner that reduces duplication, increases efficiency and effectiveness, and encourages synergises between governments to provide seamless citizen-focused services.
Building effective intergovernmental relationships is a key objective of the IOG's core training program for Iraqi leaders. Participants study formal and informal mechanisms used in Canada and other federal systems to coordinate activities by two levels of government and explore options best suited to Iraq.

Roles and Responsibilities

The understanding and recognition of the policy and program roles of each level of government that flow from their constitutionally defined powers. The exercise of these roles and responsibilities results from formal or informal intergovernmental coordination mechanisms – particularly in areas where powers are shared – and may include the allocation of funding or fiscal capacity to enable the discharge of these roles and responsibilities.

A key objective of the IOG's core training program and other learning activities is to promote a shared understanding among Iraqi leaders of division of powers between the Government of Iraq and the Kurdish Regional Government and their governorates as set out in the constitution. The IOG also acts as a convener and facilitator to promote dialogue among senior federal, regional and governorate officials and institutions on practical ways to make this division of power work best for the Iraqi people.

Decision-making processes

The existence of formally or informally recognized processes by which governments in a federal system agree on policy or program decisions. These processes may be constitutionalized or recognized as such by all parties (i.e. conventions), may involve coordinating institutions or other institutions of government, and may include means by which disagreements are adjudicated and/or resolved.

In the IOG's core training program and other learning activities, Iraqi leaders explore options for collaboration in setting and pursuing national goals in various policy areas. To support this discussion, the IOG has worked with senior GOI, KRG and governorate officials to produce comprehensive maps of the budgeting and legislative processes.

Government institutions

The organizations that make up government at both the national and sub-national. This includes legislative, executive, and judiciary bodies at each level. These organizations have the authority to make policy and deliver citizen services. In a federal system certain institutions may be granted specific responsibilities for intergovernmental coordination, decision-making, funding allocations or the resolution of disagreements between levels of government.
The IOG has established a scorecard for measuring the capacity of the governorates to take over responsibility from the GOI and KRG for various service delivery activities. We are also directly supporting some governorates in developing the institutional capacity needed to deliver services to people of Iraq.

Legal Foundations

The existence of both a constitutional law and a corpus of administrative laws that, taken together, are recognized and understood as granting legitimacy to the decisions, processes, and actions of the State and its bodies. Constitutional law defines the relationship between the branches of government (i.e. legislative, executive, and judiciary) and the relationship of individuals with these State institutions (i.e. individual and human rights). Administrative law defines the powers and accountabilities of State institutions.

The constitutional, legal and administrative principles underpinning the Iraqi Federation provide a starting point for discussion in the IOG's core training program and many other learning activities.

IOG's Learning program in Iraq related to Fiscal Federalism and Decentralization

The program provides public service executives, elected and appointed officials and representatives of civil society at the federal, provincial and governorate levels the tools to address the complex issues they face, reflecting the inter-dependencies of the three levels of government (and other sectors) in devising innovative solutions to lead the transformation of Iraq to a modern, federal, Parliamentary democracy.
The context in Iraq is important in understanding the design of the learning program. Iraq is in the middle of moving away from an authoritarian state to a constitutional democracy and all of the myriad forms and demands for power, voice and legitimacy this brings. Second, Iraq is moving from a unitary model of government and service delivery to a decentralized model, with the federal government now sharing resources and responsibilities with elected regional and provincial governments. These challenges, coupled with ongoing security concerns are being managed by Iraqi leaders from all levels of government, civil society and by the public service itself. The course modules and content have been written with the intent of assisting these leaders as they manage fiscal decentralization.

The course focuses on understanding the institutional structures and processes needed for a state to develop effective governance in a democratic, federal Parliamentary state. It teaches the participants how to evolve these institutional structures and processes within the context of the Iraq constitutional, administrative and legal framework. It also helps them develop the personal knowledge, skills and competencies needed to lead this change, to be successful in an evolving governance structure, and to build the relationships and linkages between the institutional structures that are necessary for a modern Iraq to function, and ultimately to provide better outcomes for Iraqi citizens.
It is designed for senior public executives in the federal government of Iraq, the Kurdistan Regional Government, senior officials of Governorates, elected and appointed persons of the three levels of government and representatives of civil society and academia in Iraq. Participants will work in inter-jurisdictional teams to understand and explore the realities of public policy development and implementation at each level of government, to explore new models of multi-jurisdictional collaboration to meet separate and mutual goals, and to build a strong network of public executives and opinion leaders in Iraq interested and knowledgeable of modern governance. At the end of the program participants will have knowledge and understanding of the institutions, processes, tools and competencies needed to design, develop and implement fiscal arrangements that are applicable to the Iraq context.

Federalism Primer
Why This Project Exists