72 local units failed to present budget in time and half of them are from Province 2Erring sub-national governments may get reduced budget in the following fiscal year which could affect development projects
Having been late in presenting the budget for the current fiscal year ending on Tuesday, Kalikamai Rural Municipality, Parsa, has once again failed to present its financial plan for the next fiscal year 2019-20 on time.
As per the Intergovernmental Fiscal Arrangement Act, local level budget for the upcoming fiscal year should have been presented by June 25.
Chairman the rural municipality Nathuni Prasad, who was elected from little known Nepal Sanghiya Samajwadi Party, had faced difficulty garnering support from the representatives of major parties to present the budget on time for the fiscal year (2018-19).
Prasad, however, is hopeful of their support to present the budget for the next fiscal at the earliest.
“We have not received the programmes from two wards, which is causing the delay in budget presentation. I hope to present it in a week or two,” Prasad told the Post over the phone.
The delay in presenting the budget has hit development plans of the rural municipality in the current fiscal year as it could spend just a third of the budget.
Under the Intergovernmental Fiscal Transfer Act, the local executive can spend only a third of the planned budget until the budget is passed by the local assembly.
“Most of the budget was spent on staff salaries and other administrative works. The development budget could be spent only after it was endorsed recently,” said Prasad.
“We worked to spend the budget through direct purchases and consumer committees instead of issuing a tender to fast-track the procurement process,” he added.
About a dozen local governments did not present their budget on time for the current fiscal year 2018-19.
Three months on, the situation has not changed as more than 70 local governments missed the deadline for presenting their budget for the next fiscal year 2019-20.
The Ministry of Federal Affairs and General Administration, which had collected details about the budget presentation, revealed that 72 local governments have not presented the budget for the next fiscal as of Sunday morning. Half of those local governments are from Province 2, while 10 are from Province 3, six each from Provinces 1, 5 and Karnali, and four each from Province 1 and Sudurpaschim.
Failure to present budget by June 25 is a violation of law, but there is no specific provision about a penalty if any local government flout that.
Last year, federal government officials had warned of withholding the budget but no such step has been taken yet.
Bhupal Baral, spokesperson for the Federal Affairs Ministry, said the central government has not taken any decision against the local governments for failing to present the budget on time.
But there are few options available for the federal government to mount pressure on the local governments.
The National Natural Resource and Fiscal Commission could recommend the allocation of reduced funds for such local governments.
“Performance of local governments in spending the budget in a year is an important criterion for allocation of budget to the local governments the following year,” said Baikuntha Aryal, secretary at the commission.
“The local governments which didn’t present the budget on time for the current fiscal year and failed to spend budget have received less budget for the next fiscal year compared to other governments doing well under this criterion,” he said.
The appropriation bill passed by the federal parliament recently has authorised the federal government to suspend grant to local governments if they fail to report their expenditures.
“The law has given us an option of halting grant. It was not the case until this fiscal year as there was no such legal provision,” said Harisharan Pudasaini, chief of budget division at the Finance Ministry.