CLGF-FSLGA project partnership 

CLGF is partnering with the Federation of Sri Lankan Local Government Authorities (FSLGA) on a new project "Strengthening Revenue Generation Capacity of Local Councils in the Eastern Province". This project aims to enhance the financial stability of local councils, with a view to prepare them for a set of fiscal reforms proposed to come into effect in 2029. The project has been developed as part of CLGF wider offer under its EU funded project “Empowering Local Authorities in partner countries for enhanced governance and more effective development outcomes” runing 2025 - 2027.

Changes to local government funding upcoming 

Local Councils in Sri Lanka have traditionally relied on 100% treasury-funded reimbursement grants for permanent cadre salaries. These grants do not depend on the local councils’ own revenue generation capacity. However in 2025 the national budget introduced a policy shift: under Section 63, Local Authorities are to become self-financing institutions within four years (in 2029). This is in response to IMF-recommended measures to reduce government recurrent expenditure by 5%.

This policy change poses significant risks to councils who are heavily reliant on central transfers. These may face operational shortfalls, staff payment issues, service delivery failures, and weakened democratic legitimacy and local governance. The CLGF-FSLGA project was designed to work with local councils in Eastern Province to increase awareness of the coming financing changes and build capacity at the local level to collect additional revenue to cover this important reduction in income.

Project successful launched with key actors

The launch of the project was at originally delayed due to the Ditwah Cyclone in Nov 2025 which incapacitated councils across the country. However 15 pilot councils are now in place and an introductory meeting took place in Batticaloa in Feburary. The event featured the participation of the Eastern Province Commissioner of Local Government, along with Chairpersons and Secretaries representing the fifteen local councils and allowed for a first discussion on the key issues as well as gathering baseline data.

Awareness raising will be essentail 

Awareness raising with local government will be a key first task as there was limited awareness of the upcoming funding changes and the implications for local government.

As of April the FSLGA team will begin working directly with the pilot councils to better understand their distinct challenges and what own source revenues would be best suited to their individual territories and capacities.

FSLGA is the National Association of Local Councils in Sri Lanka. It’s work focuses on strengthening the capacities of elected councillors and administrators, providing technical assistance to councils to improve the effectiveness and efficiency of service delivery, strengthening the councils' legal and policy framework, and conducting research and studies to assess further improvements to local governance systems in Sri Lanka.