Kathmandu, May 2

The Ministry of Finance (MoF) has prepared a framework to allocate grant to 744 local bodies. As local bodies will be directly provided grant in various forms — conditional, unconditional, counterpart and privileged grant — as per a provision in the constitution, the ministry has to allocate grants to the newly established local bodies.

Due to lack of scientific study on required resources for the local bodies as they were set up very recently, the MoF is preparing to allocate the total grant amount that the village development committees would have received individually to the newly formed rural municipality. MoF will also allocate grant to the newly formed metropolitan and sub-metropolitan cities that will be the total that the merged municipalities and sub-metropolitan cities would have received individually, according to finance ministry sources.

In the previous fiscal, the government had allocated a total of Rs 32 billion to local bodies and later an additional Rs 7.44 billion had been released after the new structure of the local bodies was set up. Local bodies themselves are responsible for designing projects at local level and implementing them and they will receive direct grant from government as in past.

As the structure of the local bodies was changed recently, there has been demand from the local level for resource allocation based on the development needs of each local body. However, the National Planning Commission and MoF do not have sufficient time to conduct a study on the development needs and capacity of each local body as the fiscal budget 2017-18 needs to be submitted to the Parliament by the end of May this year if there is not amendment in the constitution regarding the budget presentation.

In fact, a yet to be formed body called the Natural Resources and Financial Commission (NRFC) is responsible for resource allocation at the local and provincial levels. The constitution has envisioned the independent commission for resource allocation and revenue sharing among central, provincial and local government bodies. Since the commission is yet to be established the MoF will allocate resources to the local bodies for this fiscal. After the NRFC is set up, it will be responsible for allocating resources.

The MoF has also asked the line ministries to submit the major programmes that they are going to conduct in the local bodies next fiscal so that it can adjust the grant amount that has been allocated through existing framework developed by MoF, as per MoF officials.