Nepal | December 14, 2019

Provincial, local govts urged to follow budget rules

Himalayan News Service

Kathmandu, March 24

Provincial and local governments have to prioritise delivery of basic services to the people and properly allocate resources for the implementation of projects transferred to the province and local bodies from the federal government, while formulating the budget.

The National Natural Resource and Fiscal Commission (NNRFC), based on the Intergovernmental Fiscal Management Act, has urged the lower layer administrations to follow these provisions.

Ram Prasad Ghimire, joint secretary of NNRFC, has said that the Ministry of Finance (MoF) of the federal government has asked the provincial and local administrations to properly follow the conditions set as per the Intergovernmental Fiscal Management Act.

As per law, provincial and local governments have to give top priority to public service delivery, continuity of the projects transferred from the federal government and salary/allowances of the staffers. However, local governments have sought additional resources in the current fiscal from the federal government to manage their committed liabilities due to lack of proper allocation on priority basis.

As per officials of the MoF, the local governments have spent the budget for development and construction overlooking their need for recurrent expenses.

Implementation of projects that have been transferred from federal government has been put in as one of the conditions to lower layers of administration as these projects that are being implemented should not be halted due to lack of resources. “After implementation of projects transferred to the lower layers of administration, they can allocate resources for projects of their priority,” said Ghimire.

According to NNRFC Joint Secretary Ghimire, local and provincial governments are autonomous bodies and can formulate their own budget from the grant transferred by the federal government and their internal revenue. The NNRFC has also suggested the MoF of the federal government about the tentative figure of grant transfer to local and provincial governments.

Provincial governments have to present their budget to the Provincial Assembly by mid-June or a month before the new fiscal year begins. As per provision of Constitution, federal government presents its budget two weeks ahead of the provincial budget and provinces have to give a final shape to their budget by making necessary adjustments as per the federal budget.

The local governments have to submit their budget to the Provincial Assembly 20 days ahead of the fiscal year calendar. The provincial governments need to formulate their budget in a similar manner to that of the federal government. The Ministry of Finance of the federal government has drafted the Provincial Fiscal Procedure Act to facilitate the provinces to provide the guidance for budget formulation.

The provincial and local governments will be able to mobilise their revenue from this fiscal. The NNRFC has said that 30 per cent of revenue collected through excise and value added tax (VAT) will be shared with the local and provincial governments as per the provision of the Intergovernmental Fiscal Management Act.


A version of this article appears in print on March 25, 2018 of The Himalayan Times.


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