Representatives from local units picketed the Ministry of Finance at Singha Durbar on Sunday, protesting against the reduction in the fiscal equalisation grants allocated to local units for the current fiscal year.

Over 150 chiefs and deputy chiefs of municipalities and rural municipalities staged a sit-in at the ministry’s main entrance. They said they would meet with Finance Minister Barsha Man Pun to present their demands.

The elected representatives said that service delivery and development projects of local units across the country have been affected due to the grant reduction by the ministry.

They staged protests demanding the release of funds. They said thousands of projects under construction across the country have been stalled after the government decided to cut the grant by about 26 percent. They expressed their anger, stating that they will have no alternative other than to further intensify the agitation if the grant amount is not released immediately.

Bhim Dhungana, president of the Municipal Association of Nepal, accused the federal government of ignoring their requests not to reduce the grants.

As per the budget for the fiscal year 2023/24, Rs 58.67 billion and Rs 87.35 billion have been allocated to the provincial and local units, respectively, on the recommendation of the National Natural Resources and Fiscal Commission. However, only seven percent of the 25 percent due to be released to the local units as the third instalment was disbursed.

On May 25, the Financial Comptroller General Office directed its subordinate bodies to release up to 74.11 percent of the equalisation fund. Based on this directive, 25.89 percent of the grant for local units has been cut in the current fiscal year.

Earlier in February, a similar letter was sent, asking for the release of up to 55.73 percent of the grant. At that time, the office directed a reduction in the grant based on the revenue collection until mid-January.

Dhungana said that the government has ignored the issue of releasing grants even as the fiscal year is about to end.