The federal government has halted grants to the local governments that failed to introduce the budget for the current fiscal year.

As per the Intergovernmental Fiscal Arrangement Act, all local governments should present their fiscal budgets by June 25.

The federal government provides four types of grants to local governments—fiscal equalisation, conditional, complementary and special grants. For the current fiscal year 2019-20, the federal government has allocated Rs213.82 billion under conditional grant and fiscal equalisation grant. In addition to these grants, local governments are also entitled to receive complementary grant and special grant for specific projects

“As per the guidelines set by the Finance Ministry, the concerned District Treasury Offices have withheld the grants meant for local governments for failing to present budgets,” said Jagannath Devkota, spokesperson of Financial Comptroller General Office.

District Treasury Offices, which are under the comptroller general’s office, keep account of the government’s revenue and expenditure.

This is the first time that the federal government has halted these grants to local governments for failing to present their budgets in time. In the previous two fiscal years, following the 2017 local elections, the federal government had released the grants to all local governments, irrespective of whether they presented their budgets in time or not.

The federal government’s move has raised concerns among local government employees. They are worried if this would hamper their salary payment.

Santosh Raya, a non-gazetted senior officer at Chhinnamasta Rural Municipality, Saptari, said there is a general worry whether the staff at the rural municipality office and other government employees, including teachers, would be getting their salary in time or not.

Most local government employees depend on the conditional grant of the federal government for their salaries.

“We recently met the chairman of the National Natural Resources and Fiscal Commission in Kathmandu and he told us not to expect the grants to be released until the budget is presented,” Raya told the Post.

Chhinnamasta presented its budget for the last fiscal year 2018-19 in April, nine months after the fiscal year began, as the elected local representatives could not agree on the budget share for the ward level.

This fiscal year, too, the ward offices in Chhinnamasta are yet to submit their fiscal programmes.

“We hope to present the budget within a month,” Raya told the Post.

According to the Ministry of Federal Affairs and General Administration, as many as 42 local governments—most of them in Province 2, just like in the last fiscal year— are yet to present their budgets.

According to the ministry, as many as 30 out of 106 local governments in Province 2 have not presented their annual budgets. Likewise, five local governments in Province 3, four in Province 5, two in Sudurpaschim Province and one in Province 1 are yet to present their budgets.

Hari Sharan Pudashaini, chief of budget division at the Finance Ministry, told the Post that the ministry had sent the budget related guidelines to the comptroller general’s office with the direction to withhold the grants to local governments whose annual budgets have not yet been passed.

“Such move was taken because some local governments went against the law by failing to present the budget,” Pudashaini said.

Nearly two weeks ago, the Federal Affairs Ministry had forwarded a list of local governments that had failed to present their budgets to the Finance Ministry and the National Natural Resources and Fiscal Commission. “We had provided the list prescribing necessary measures for failing to present their budgets,” Bhupal Bara, spokesperson at the Federal Affairs Ministry, told the Post.