by D.D.M Waidyasekera
Governance Series
Decentralization and fiscal devolution have assumed importance in Sri Lanka particularly in the context of the ongoing ethnic crisis, but 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 significance and inadequacy of the revenue sources devolved to the Provinces, 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.

The paper also discuses the taxation and fiscal changes including the concept of revenue sharing, envisaged in the Government’s Proposals for Constitutional Reform and whether they would correct the existing problems of weak fiscal management and control.