Kathmandu, November 4

After a long debate on a system to track the real-time expenditure of local units, the Ministry of Finance (MoF) and the Ministry of Federal Affairs and Local Development (MoFALD) have begun the process to expand the Local Level Financial Management Information System (LLFMIS) to 753 local units.

Developed by the Public Expenditure and Financial Accountability (PEFA) Secretariat, expansion of the system has begun with orientation to the local units of Province-4.

It took a long time to decide on the expansion of the system, which would help the federal government track expenditure as well as budgeting in the local units in real-time as the MoF and MoFALD had failed to see eye to eye on the issue.

The MoFALD, under the assistance of Asian Development Bank (ADB), has developed a software named MARS — Municipality Administration and Revenue System — which is being piloted from the Kathmandu Metropolitan City and the ministry wished to expand this software to each municipality.

However, the MoF believed the process to expand MARS to each local body would be time consuming and require huge resources.

While MoF wanted to connect all local bodies to the central server through LLFMIS, the MoFALD was stuck on expanding MARS to the local units.

Both the ministries finally agreed to expand the LLFMIS to the local units, as the MoF told MoFALD that MARS would be expanded to all units after the test phase is completed.

“We need real-time data of expenditure of the local units to make prompt decisions,” said Kewal Prasad Bhandari, joint secretary of the Budget Division under MoF, explaining the urgency of expanding LLFMIS, as MARS is still being tested.

According to PEFA Secretariat, LLFMIS is an online system, which will be used for the budgeting and maintain expenditure account of the local units and connected to the central server. “Once all the local units are interconnected with LLFMIS, the central government will get real-time data of expenditure,” said Murari Niraula, member secretary of PEFA Secretariat.

According to him, plans are afoot to develop an offline version of the online-based system to expand it to remote areas as well.

Once the offline version is developed, the expenditure account could be maintained through offline system in the absence of internet connectivity and then be transferred through the use of internet, as per Niraula. “We were supposed to expand this system since the beginning of the fiscal, but the schedule was pushed back as MoFALD wished to expand its own system.”

According to Purushottam Nepal, joint secretary at MoFALD, the ministry will expand MARS to the local bodies once the consultant submits a report, which would make it clear whether the system can be expanded to the local bodies based on the experience in Kathmandu Metropolitan City.

“Initially, MoF is connecting to all the local units through LLFMIS because it would take a long time to expand MARS. However, in the long run, all the local units will be connected through our system, which will give prompt data of revenue, budgeting and expenditure of the local units, including land, building registration in the local bodies.”

The MoF officials, however, expressed doubt that the system developed by the MoFALD can actually be rolled out in other local bodies. They have termed the plan of MoFALD as a ‘dream project’.