Local fiscal administration encompasses the several tasks associated with the delivery of a program of government services to the citizenry, including planning the program, executing it, financing it, and evaluating its results. Proper implementation of local programs should contribute to the well-being of the citizenry and ensure the fiscal sustainability of the operations of the government and local economy. The administrative tasks may be done by the central government (possibly through its local offices), by the local government, or by some cooperative arrangement involving both levels. Examples of each combination appear across industrial, developing, and transition countries. Regardless of the arrangement, the tasks must get accomplished in order for the finances of the government to be managed. The tasks are interrelated components of a functioning program of fiscal administration. Because the size, assigned responsibilities, political con- straints, and legislative structures of local governments vary dramatically, even within a single country, the articulation of fiscal administration will itself be subject to great variation. However, the tasks identified here are basic to all local fiscal administration.
The system of local fiscal administration is expected to provide fiscal discipline and responsibility, responsive resource allocation, and efficient and effective government operations (Campos and Pradhan 1996; Schick 1998). The system should function with transparency of policy decisions, program results, and finances, both within the government and to the community at large.