A political storm is brewing following allegations by the Opposition that President Anura Kumara Dissanayake had threatened to cut off funding to Local Government (LG) bodies that are not controlled by the National People’s Power (NPP). The claim has raised serious concerns over the impartiality of fiscal governance and the potential weaponisation of State funds against political opponents.
In response to the uproar, the Election Commission (EC) has issued a letter requesting the President to refrain from making statements that could influence the course of the elections. The commission has emphasised that all LG institutions, regardless of their political alignment, are entitled to fair and equal access to public resources, particularly as they perform essential services for citizens.
EC Chairman R.M.A.L. Rathnayake, speaking to The Sunday Morning, stated that complaints had been lodged by Opposition parties and other election monitoring bodies that the statements of the President were in violation of provisions of the Local Authorities Elections Ordinance.
However, he did not wish to comment on the truthfulness of the statement. “We did not allege in our letter that the President’s statements could indeed attain fruition. That is not our role. We did however ask the President to refrain from making such comments as it would unduly influence the outcome of the elections,” he said.
President Dissanayake has since denied the allegations, stating that he never made such remarks and that his administration is committed to equitable development across all regions. However, the controversy has exposed deep-rooted mistrust between the Executive and local authorities, and has reignited debates over centralisation of power, fiscal transparency, and the political independence of State institutions.
Exercising undue influence
Prior to the letter dispatched by the EC, the People’s Action for Free and Fair Elections (PAFFREL) had issued a media statement on 18 February against the utterances of the President.
The press release stated that Dissanayake had made such statements in Mannar and at several other public meetings in the run up to the forthcoming LG Polls. It also alleged that the President had violated Section 82 of the Local Authorities Elections Ordinance by exercising undue influence.
Speaking to The Sunday Morning, PAFFREL Executive Director Rohana Hettiarachchi stated that President Dissanayake had not explicitly claimed he would block funds.
“He made indirect remarks implying that if ‘corrupt’ individuals from other parties were elected, he would need to think twice before allocating resources. In contrast, if his own party’s candidates were to win, he implied he could trust them and allocate freely. This is an indirect form of influence,” he said.
Hettiarachchi criticised the President for the remarks, claiming that such statements should not be made by a leader who was elected on a pledge to end such unethical practices. “This type of influence was also seen under the previous Government and we criticised it then too. It’s unacceptable under any administration,” he said.
He further claimed that the role of Dissanayake as both President and Minister of Finance would play an immense role in influencing the decision of the people to vote, regardless of whether he would hold true to his statements.
“Although he may not have the legal authority to restrict funds, his role as both President and Finance Minister, in addition to his being the Leader of the ruling party, gives him significant informal influence. People perceive he has the power and that perception itself can be damaging. It contributes to a culture where political bias influences governance decisions and that is not how a President should speak,” he lamented.
When asked whether the President did have some power to influence how local authorities were funded, Hettiarachchi responded negatively. “No, he cannot. Local authorities receive resources from various channels. Some revenue is self-generated, while others come through allocations by different ministries, including the Ministry of Local Government, especially for administrative costs such as salaries,” he said.
The ministry’s role
Following the claim that the Ministry of Public Administration, Provincial Councils, and Local Government exerted some influence in the funding of local authorities, The Sunday Morning contacted Ministry Secretary S. Aloka Bandara for a comment. He claimed that such powers of influencing the funding of local authorities was not vested in the President.
According to Bandara, local authorities receive their core funding from the Finance Commission of Sri Lanka (FCSL), which is responsible for disbursing salaries and other administrative expenses.
While Provincial Councils operate as devolved units with a degree of autonomy, and local authorities share in that autonomy, the ministry plays a key coordinating role, particularly in facilitating foreign-funded projects. In addition to central allocations, local authorities generate revenue through various initiatives, enabling them to formulate budgets and reinvest in local development based on their income streams.
“Although Provincial Councils manage many of their own affairs through self-funding projects, they are constitutionally barred from entering into agreements with foreign governments, a power reserved solely for the State. As a result, any foreign assistance earmarked for provincial or local authority projects must be channelled through the ministry.
“In order to address this, a structured procedure has now been established to ensure that such funds are appropriately routed to the Provincial Councils and local authorities, preserving both legal clarity and operational efficiency,” Bandara added.
The FCSL’s role
Local authorities in Sri Lanka function as the grassroots institutions of public service delivery, but powering their daily operations requires strategic financial coordination. At the helm of this fiscal machinery sits the FCSL, tasked with ensuring that local authorities receive essential funding to carry out their mandates.
In an exclusive conversation with The Sunday Morning, FCSL Secretary A.T.M.U.D.B. Tennakoon explained how the commission balanced constitutional mandates, fiscal allocations, and safeguards to support local governance effectively.
According to Tennakoon, local authorities operate with two major categories of expenditure, which are recurrent and capital. Recurrent expenditure, primarily salaries and allowances for staff, constitutes the larger share.
“To meet these obligations, the Finance Commission collects salary requirements for the approved cadre of employees through a structured process involving the Provincial Councils, Local Government commissioners, and the chief secretaries of each province.
“These requirements are then considered during the planning process for the national budget and the Finance Commission makes its recommendations accordingly. Funds are allocated from the Central Government and redistributed through the Provincial Councils,” he said.
“For capital expenditure, the commission allocates funding under the Provincial Specific Development Grant (PSDG). These grants are intended for infrastructure and community services at the local level, such as roads, waste management, public libraries, weekly markets (‘sathipola’), crematoriums, and city beautification,” he further added.
While Tennakoon acknowledged that capital allocations fall short of the total development needs, he emphasised that the Government’s support for salary payments allowed local authorities to use their own generated revenue for such development work, a fiscal balance designed to give autonomy while ensuring functionality.
However, the Finance Commission does not directly engage with local authorities. As clarified by Tennakoon, Local Government falls under the devolved subjects in the 13th Amendment to the Constitution and is thus administered by the Provincial Councils. “Article 154 clearly establishes this framework, reinforcing the layered structure of governance in Sri Lanka,” he said.
On the subject of accountability, Tennakoon noted that no specific corruption-focused criteria were embedded at present in the allocation process. The commission’s primary mandate is to reimburse salaries based on the approved cadre list vetted by the Department of Management Services. Any staff hired outside this approved list are not eligible for Government reimbursement, a fact which, he pointed out, inherently discouraged irregular hiring.
“The cadre list is legitimate and formally sanctioned. We strictly adhere to it when disbursing funds. However, our mandate does not allow us to vet on the basis of corruption-based criteria,” he added.
In brief, the FCSL’s role in sustaining local governance is both technical and constitutional. It is a delicate balancing act, one that involves coordinating with multiple layers of government while keeping public service delivery uninterrupted. As Tennakoon suggests, the key to avoiding inefficiencies lies not in bypassing existing systems but in making them work better.
Indirect curtailment of funds possible
The role of the Finance Commission, the operation of the constitutional provisions on ensuring autonomy of local authorities and Provincial Councils, and the functions of the Ministry of Provincial Councils and Local Government all work to negate the statement of President Dissanayake.
The President does not have the authority to govern financial matters of local authorities, as such matters are specified in law. There is also no vetting process to restrict funding of local authorities.
However, Hettiarachchi claimed that certain mechanisms restricted the access of local authorities to other matters of funding, such as construction of roads through the Road Development Authority (RDA) or construction of small bridges, which required external funding.
”These may be restricted owing to the reliance of local authorities on State-run infrastructure and machinery. Therefore, even though the President does not wield direct power, curtailment of funds to local authorities is still possible by exerting political pressure,” he said.