Rs 75bn to be transferred to local bodies today

Kathmandu, March 14

The federal government will transfer the last tranche of grant worth Rs 75 billion to 753 local units on Thursday, as the fiscal budget has provisioned grant transfer in three phases — the first tranche in the beginning of the fiscal (mid-July), second in mid-November and the last in mid-March.

The government will have transferred the entire grant commitment to local bodies, which amounts to Rs 225 billion, on Thursday. However, the federal government is in an uncomfortable position as the budget surplus based on cash flow is just Rs 18.44 billion. After the transfer of funds to local bodies, the budget deficit will loom around Rs 56.56 billion.

As per the Financial Comptroller General Office (FCGO) — internal auditor of the government — the government’s income in this fiscal stood at Rs 618.67 billion and expenses at Rs 528.98 billion as of today. The government inherited budget deficit of Rs 71.25 billion from last fiscal. This means that the budgetary surplus is insufficient to meet the grant transfer amount.

The federal government will utilise the fund from the government’s treasury operated by the central bank to provide the grant to the local bodies. The funds will later be replenished to the national treasury through the collection of revenue, domestic debt and transfer of foreign loans and grants.

The government’s treasury operated by the central bank is at a surplus of Rs 285 billion. However, there is an imbalance in the income and expenditure of the government in this fiscal, as a huge liability was transferred to this fiscal from the last fiscal.

Apprehensive about the budget deficit in this fiscal too, Finance Minister Yubaraj Khatiwada has introduced austerity measures to cut the expenses by realigning the funds to priority projects. He has instructed for a halt to the projects going to be initiated under the resource guarantee commitment from the National Planning Commission and Ministry of Finance.

Quick highlights

Government’s income              Rs 618.67bn

Expenses                                    Rs 528.98bn

Last fiscal’s budget deficit        Rs 71.25bn

Amount as of March 14; Source: FCGO