Policy Implications on Local Government Expenditure in Sri Lanka

Local governments are closer to the people especially in the context of democratic governance than other units of governments. ‘Determinants of government expenditure’ is therefore a recurring theme both in government and scientific discourse. This study intends to develop and test a comprehensive and systematic model on the allocation of government expenditures in urban councils in Sri Lanka to identify the key determinants of local government expenditure decisions. Therefore, the study considers three major perspectives, socio-economic, political and governmental and justifies the relevancy of models of expenditure determinant research. This is a research. The first premise is that local government expenditure varies on the mixture of socio-economic, political and governmental factors. More socio-economic variables in the model indicate a demand driven aspect in local government resource allocation. Local government’s tax effort is a significant fact together with financial transfers from the central government in expenditure decision-making. As policy implications participatory budgeting system and strengthening of the local revenue base are proposed.

Sri Lanka Journal of Development Administration, Vol. 5, pp. 93-108, 2015