by D.D.M Waidyasekera
Governance Series No. 8
Decentralization and fiscal devolution have assumed importance in Sri Lanka particularly in the context of the ongoing ethnic crisis, but the Provincial Council system which arose from the Thirteenth Amendment to the Constitution has several inherent weaknesses and deficiencies.

This paper analyses the fiscal and financial issues pertaining to the Provincial administrative system including the relative insignificance and inadequacy of the revenue sources devolved to the Provinces, provincial revenue buoyancy, the wide disparity between the different provincial administrations, the nature of provincial expenditure and the weaknesses of the prevailing grants system on which the Provincial Councils depend for their existence and functioning.

It also includes a list of the financial powers and functions devolved to the provinces, those in the list reserved to the centre and the functions relating to planning in the concurrent list as provided in the Thirteenth Amendment. The paper also includes a summary of the recommendations made to enhance the revenue performance of provincial administrations so as to reduce the vertical and horizontal imbalances presently prevalent.