Kathmandu, June 23

Following the federal and provincial budgets, the local bodies will present their budgets in the municipal assemblies on Sunday.

As per the provision of the Intergovernmental Fiscal Management Act, local bodies have to present their budgets in their respective assemblies by Asadh 10 of the Nepali calendar — 20 days ahead of the end of the fiscal year. Based on this provision, metropolises, sub-metropolises, municipalities and rural municipalities will present their budgets in the municipal assemblies on Sunday.

However, some of the municipalities and rural municipalities have already presented their budgets and some of them have said that they will be unable to present their budgets in the given timeframe, according to Purushottam Nepal, joint secretary of the Ministry of Federal Affairs and General Administration.

Local bodies will finance their budgets through their own revenue; grant transferred from the federal and provincial governments; revenue shared from the federal government and provincial governments and through internal debt.

Local bodies can also raise internal debt to finance their budgets after receiving approval from the federal government. If the local bodies cannot pay back the internal debt then the federal government will do so from the portion of the grant allocated to the concerned local bodies.

Altogether, 753 local bodies will mobilise revenue shared from the divisible fund worth Rs 53.82 billion in next fiscal 2018-19. Local bodies will directly get 15 per cent of the total Value Added Tax (VAT) and the internal excise. Apart from this, they will get 25 per cent royalty collected from mountaineering, electricity, forest, mines and minerals, water resources and other natural resources.

The federal government has transferred Rs 85.21 billion as equalisation grant and Rs 109.85 billion as conditional grant. The provincial governments have also transferred grants to the local bodies. Grants from the federal government are transferred in four tranches or every quarter from the beginning of the fiscal year in mid-July.

The federal government transfers 40 per cent of the conditional grant in the beginning of the fiscal year and the remaining amount is transferred based on the performance of the expenses.

Equalisation grant has been allocated based on the need of development in local bodies; multidimensional poverty; socioeconomic discrimination and status of infrastructure development in local units, as per National Natural Resources and Fiscal Commission — the constitutional body that recommends required fiscal transfer to sub-national governments and manages the utilisation of natural resources in an undisputed manner.

The savings of the local governments of this fiscal will be mobilised in the next fiscal’s budget. The federal government had transferred Rs 275 billion to 753 local units in the current fiscal year. However, it is assumed that the local bodies have spent only around Rs 175 billion in the ongoing fiscal.

Fiscal transfer from federal government

Category

Numbers

Equalisation grant

Conditional grant

Metropolis

6

Rs 2.66bn

Rs 4.05bn

Sub-metropolis

11

Rs 3.56bn

Rs 4.48bn

Municipalities

276

Rs 38.17bn

Rs 50.18bn

Rural municipalities

460

Rs 40.82bn

Rs 51.14bn

Fiscal transfer from provincial governments to local units

Province

Equalisation

Conditional

Special

Province 1

Rs 500m

Rs 2bn

Province 2

Rs 350m

Rs 1.11bn

Province 3

Rs 1bn

Rs 3.64bn

Rs 650m

Province 4

Rs 1bn

Province 5

Rs 26.33m

Rs 26.33m

Province 6

Rs 400m

Province 7

Rs 620m