This thesis paper describes the fiscal autonomy of Addis Ababa City Government usingrnprimary and secondary sources of data. The constitutional and legislative frameworksrnhave been critically examined in order to determine whether they would create conducivernenvironment within which Addis Ababa would be able to exercise optimum degree ofrnautonomy in its local government. The study also incorporates close analysis of thernrevenue sources and the degree of control the City has over these sources; spendingrnautonomy and fiscal importance as well as transfers and borrowing frameworks of thernCity.rnThe findings of the study indicate existence of enabling environment in which AddisrnAbaba City Government can enjoy better degree of fiscal autonomy. With substantialrnexpenditure responsibilities and productive revenue sources, Addis Ababa Cityrngovernment has the opportunity to strengthen its fiscal position. However, the increasingrntrend of its actual expenditure, Addis Ababa City Government is required to takernappropriate actions to increase its revenue and involve the community in servicernprovision process. It is also found in practice that except differences in theirrnconstitutional statues, Addis Ababa and Regions tend to have similar expenditurernresponsibilities and revenue powers. The major difference in their IGFRs goes to the sizernand system of Federal government transfers. While Regional governments are foundrnhighly dependent on block grant transfers, Addis Ababa is found relatively deprived ofrnthe transfer system. The study concludes that Addis Ababa City Government has betterrncomparative and competitive advantages to exploit the geographic, economic andrnadministrative opportunities to enhance its fiscal autonomy. Finally, the paper forwardsrnimportant recommendations to policy makers and government officials as well as tornprospective researchers