Kathmandu, December 14

The Ministry of Federal Affairs and General Administration has issued a circular to all district coordination committees and local levels, directing them not to accept assistance or loans from foreign donor agencies/communities or investors without consent of the federal government.

In a response to a letter from the Ministry of Finance citing a recent decision of the Council of Ministers, the MoFAGA urged district coordination committees and local levels to abide by the constitutional provisions and other existing laws related to exclusive and concurrent powers of all three tiers of government. Article 59 (6) of the constitution states that the Government of Nepal shall have power to obtain foreign assistance and borrow loans. Such assistance or loans shall be so obtained or borrowed to maintain macroeconomic stability of the country.

Similarly, Clause 7 of Schedule-5 of the constitution has set down the matters related to international treaties or agreements, extradition, mutual legal assistance and international borders and transboundary rivers as the exclusive power of the federal government.

“The MoF requested the MoFAGA to issue a circular to all the district coordination committees and local levels in conformance with the November 15 decision of the Council of Ministers, citing that there was the possibility that foreign assistance and loans would be accepted without bringing it to the knowledge of the federal government,” said an official at Development Assistance Coordination Section of the MoFAGA.

The official informed that the central government became very cautious about this issue after it came to know that some local levels were planning to sign agreements with foreign donors for assistance and loans by keeping the federal government in the dark.

The Government of Nepal may obtain foreign grants and assistance for plans or programmes to be implemented by the provincial and local governments.

According to Section 12 of the Inter-governmental Fiscal Arrangement Act-2017, provincial and local governments shall not obtain any form of foreign grant or assistance or implement or make to implement any plans or programmes with the foreign grants or assistance, without prior consent of the Government of Nepal, the circular read.