This study aimed to identify the financial constraints faced by district government and its implications for service delivery in Swat. This study aimed to identify the major challenges faced by local government in attainment of funds and the impact of these problems on the implementation of ongoing projects and local community. The target area of this study was district Swat and the targeted respondents were interviewed by using semi-structured interviews. A total of 20 interviews were conducted face to face from targeted respondents using key informant interview. Qualitative research strategy was used and research design for this study was descriptive. The main findings of the study was that the district government of Swat is facing financial constraints in terms of delay of funds up to two to three month from provincial government, gap between approved and released funds is also significant. Thus, the gap in the release of funds has resulted in delay and failure in implementation of several mega projects in Swat such as Jirga Hall, Darulaman etc. The district government of Swat has no sources of revenue generation because Swat is declared as a tax-free zone, while only few taxes are collected at tehsil level. Local government with these financial constraints and hurdles in revenue generation are unable to deliver basic services and the local people have to bear the consequences in the form of various problems. Supervisor:- Dr. Iftikhar Ahmad