Kathmandu, Mar. 24: Even after four years’ experience in federalism and governance, some of the local bodies failed to formulate and execute their budget in time.
While the third quarter of the current fiscal year 2021/22 is nearing its end, 12 local governments haven’t been able to pass their budget document. According to the constitutional provision, local bodies should formulate and pass their budget by the local assembly 20 days before the end of the fiscal year.

However, experts said that the budget formulation was affected not by the poor technical capacity but political interests or conflict of interest among the representatives of the respective local body, especially between the chair and vice-chair.

No government can spend money, including the development financing and salary payment, without getting their budget passed from the municipal assembly. Such expenses are illegal and unconstitutional, Joint Secretary at the Ministry of Finance (MoF), Baburam Subedi, said at an interaction on ‘Five years of fiscal federalism and implementation’ organised by the National Association of Rural Municipalities in Nepal (NARMIN) on Wednesday in the Capital.

Basanta Adhikari, Spokesperson of the Ministry of Federal Affairs and General Administration (MoFAGA), said that 151 local bodies failed to present their budget in time this year.
Likewise, 59 local bodies couldn’t perform the audit of their financial activities in the last fiscal.
He said that the ministry is initiating dialogue with the local bodies to get the feedback and suggestions on governance which is expected to help in the policy and planning for the forthcoming leadership in the subnational governments.

According to Adhikari, lack of exit plan for the local representatives is the immediate challenge. “This is the first experience for the staff of the local bodies as well. Issues like clearing arrears and other financial liabilities, returning goods they received from the local government are the major issues in the exit plan. The ministry is launching orientation programmes for the local representatives,” he said.

He maintained that the mindset at the federal level should be changed. Number of civil servants is increased at the federal level while the local bodies are facing shortage of required human resources.
If local bodies have failed to bring about the budget, the federal and provincial governments or National Natural Resource and Fiscal Commission should help them in resolving the obstructions and finding ways to move forward, said Rameshwore Khanal, former Finance Secretary.

However, Khanal said that there was great reform in terms of service delivery at the local bodies. They immensely contributed to the prevention, control and treatment of COVID-19 pandemic, and performed well in physical infrastructure development, waste management and sanitation.

In many local bodies, enrolmen in government/community schools is increased compared to the private schools in the past four and half years. Physical facilities and quality of
education of public schools have been considerably improved, said Khanal.

“Arrears, training for human resources are the challenges for the local bodies. Representatives and administrative staff lack knowledge about arrears and clearing them,” he said. Former Chief Secretary, Dr. Som Lal Subedi said that provinces should transfer more resources to the local bodies, current share of 4 per cent is not enough.
Local government representatives said that the implementation of federalism had primarily rested on their shoulders and local bodies performed better than expected although they got negligible support from the federal and provincial governments.

Krishna Prasad Dahal, Chairman of Finance Committee at the House of Representatives of the Federal Parliament, said that increasing trend of conditional grant from the federal government is not a good sign. It is being used to mobilise the party cadres and influence public opinion in targeted areas, he said.

Federal government should not dictate the local governments about the development projects and activities. The Finance Committee will soon issue a directive to the federal government, said Dahal.
He urged to create a document incorporating learning, shortcoming and weaknesses of the first five years in fiscal federalism. According to him, one of the reasons behind the damning opinion against federalism is the poor performance of the local governments.