The seventh annual report of the National Natural Resources and Finance Commission shows that not only are grants not allocated as recommended by the commission, but even the amount designated to be sent to the lower levels is only partially transferred.
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It appears that the overall budget has been implemented as the federal government has cut the amount of grants under various headings allocated to the provinces and local levels, and the provincial government has allocated them to the local levels through the annual budget.
According to the seventh annual report of the National Natural Resources and Finance Commission submitted to the President on October 30, it has been observed that not only are grants not allocated as per the commission's recommendations, but even the amount specified to be sent to the lower levels is being partially transferred. This trend has led to problems in budget implementation, the commission's annual report states.
"Although the commission recommended that the government of Nepal transfer 60 billion rupees to the provincial government and 88 billion rupees to the local government for the fiscal year 2081/82, it appears that 91.76 percent of the allocation has been transferred to the provincial government and 91.74 percent to the local government," the report states. "The budget implementation of the provincial and local governments appears to have been affected by the failure to transfer the fiscal equalization grant as per the recommendation and budget allocation."
The report states that not only the federal government but also some provinces have not transferred the fiscal equalization grant allocated to the local level. In the last fiscal year, Lumbini Province has transferred only 99.75 percent and Karnali Province has transferred only 98.91 percent.
Last year, these two provinces allocated Rs 950 million each towards the financial equalization grant. The report of the commission states that these two provinces have not been able to disclose the objective basis and reason for not transferring the financial equalization grant as allocated.
Similarly, the report also states that the federal government and the provinces have not provided the commission with any data regarding conditional grants. “As the data is not available, it could not be analyzed whether the conditional grants were transferred as per the basis recommended by the commission to the government of Nepal and the provincial governments for the previous fiscal year,” the annual report states.
The commission has also pointed out that some local levels did not comply with the law when taking loans from the Municipal Development Fund. In the last fiscal year 2081/82, 16 municipalities took loans worth Rs 371.936 million from the Municipal Development Fund.
The commission has mentioned in its annual report that some local governments have raised loans without even estimating internal debt in the annual budget, and some municipalities have raised loans in excess of the limit recommended by the commission.
