Local bodies asked to prepare programmesThe Ministry of Finance has called on newly-formed local bodies to frame short- and mid-term development programmes to streamline the process of formulating annual budget.
The Ministry of Finance has called on newly-formed local bodies to frame short- and mid-term development programmes to streamline the process of formulating annual budget.
Development programmes provide a ballpark figure on expenditure needs of local bodies, according to Nirmal Hari Adhikari, head of the Intergovernmental Fiscal Management Division at the Ministry of Finance. Based on this, local bodies can identify revenue gaps and find ways to plug those gaps.
“These processes enable local bodies to prioritise projects and identify funding sources to complete the projects,” said Adhikari. “This also guarantees funding for projects that take more than a year to complete.”
Although central government bodies cannot compel local bodies to follow its orders on budget formulation, the Finance Ministry had laid the recommendation to ensure metropolitan and sub-metropolitan cities, and municipalities are not left behind in the development process due to inefficient budgetary planning.
“We can provide technical expertise to local bodies to prepare short- and mid-term development programmes if there is need,” Adhikari said.
Since Nepal moved from unitary to federal government system following promulgation of the new constitution in September 2015, enormous decision-making power has been transferred from central to local bodies.
One such power devolved to local bodies is formulation of the annual budget, which previously used to be under the domain of the central government. Also, local bodies have now been given the responsibility of catering basic public services, like health and education, and building basic infrastructure, for which proper planning is necessary.
Local people are expecting a lot from the newly-formed bodies, as they have just elected their local representatives after a gap of around 20 years.
“If local bodies fail to deliver results, dissatisfaction will grow, creating hurdles in the process of institutionalising the newly-embraced federal government system,” said Adhikari. “It is, therefore, important to plan properly and do things right because a lot is at stake.”
The central government has said it will provide four types of grants—fiscal equalisation, conditional, matching and special-to local bodies to ensure proper implementation of various programmes.
It has also agreed to provide 15 percent of the income generated from value added tax (VAT), and domestic excise duty to local bodies.
On top of this, 25 percent of royalties generated from use of natural resources, namely mountains, hydropower, forests, and mines and minerals, will also be extended to local bodies.
But Nepal has a long history of sitting atop available fund without using it. If local bodies repeat this mistake, Nepal’s plan of promoting bottom-up development model is doomed to fail.
“It is, thus, important to frame implementable programmes rather than aspirational ones,” said Adhikari.