• are empowered as legislative, administrative, development planning, budgeting, rating and service delivery authorities;
• have clearly defined functions and responsibilities as well as the power to own, control and manage important expenditure decisions in the local public sector;
• have adequate financial resources and substantial authonomy in the allocation and utilisation of resources;
• have complete ownership of their budgets;
• have structures and mechanisms to promote and enhance probity; accountability and transparency in their administration;
• achieve efficiency, effectiveness and economy in the management of resources; and
• have the capacity to deliver on their mandate.

Fiscal decentralisation is one of the four key components of the Government of Ghana's overall decentralisation policy. The other three components are: political decentralisation, administrative decentralisation and participatory development planning.

Fiscal decentralisation in particular is a critical component intended to facilitate the implementation of the entire decentralisation policy and to give it a practical effect. It has been described variously as the "fourth leg",the "prime mover" or the "driving force of success" of the programme of decentralisation in Ghana.

Concerned essentially with decentralising the public financial management system, fiscal decentralisation addresses the division of fiscal responsibilities between central and local governments and the transfer of such responsibilities from the former to the latter. In specific terms, fiscal decentralisation entails putting in place the institutional and regulatory environment; revenue allocation, inter-governmental transfers and borrowing arrangements; planning and budgeting processes; and financial management (including supporting information technology) arrangements.

Credit: Ghana Fiscal Decentralisation project: Design Report, CIDA Project #400/1878, September 2002