Urban centres constitute an important part of local government in Ethiopia.rnThey serve as the centre of services, manufacturing and markets for bothrnurban and rural people. Thus, improving urban management should be partrnof the national development endeavor. One of the important conditions inrnthis regard is improving the financial management of the urban centres. Thisrnin turn calls for improving revenue bases, proper allocation, spending andrnrecord keeping. However, the fact that urban centres in Ethiopia are beingrngoverned by age-old rules and regulations, lack of viable revenue bases, lessrnbuoyant sources, lack of stable management and poor municipal staff profilernhave obstructed municipalities ji-om providing urban services to theirrnresidents in a meaningful manner.rnThis paper analyses the financial management of Jimma town in light of thernabove issues. It appears that the financial management of the city isrncharacterized by dual problems of scarcity of fimds on the one hand andrninappropriate management of those which are available on the other. Thesernproblems are analyzed in terms of the revenue structure of the city, itsrncollection process and the problems encountered. It also critically assessesrnthe allocation and spending which includes the budgeting process, recordrnkeeping and inspection. Then in its conclusive remarks, the paper tries tornsuggest ways and means to improve sources of revenues and theirrnmanagement. This last part consists of two issues. Since urban centres arernaffected by both internal and external forces, any attempt to reform urbanrnfinance must take duly these factors in to account. Internal financial issuesrninclude effective institutional capacity that could enable the municipalrngovernment to manage its financial resources. External factors include thernremoval of heavy hands of higher tiers which in this case includes zonalrnadministration and zonal bureau of works and urban development.