Confusion over budget for new local federal units

- Post Report, Kathmandu

Sep 27, 2017-

The government has yet to decide on allocating financial resources to the recently created local federal units in Province 2 even as people’s representatives for the local governments have been elected.

The government created nine local units in the province on August 11 after presentation of the annual budget for the current fiscal year.A total of Rs225 billion was allocated for the 744 local units. The Finance Ministry has already released one-third budget to these councils.

According to officials, the ministry is yet to decide whether to allocate fresh budget for the new local councils or to readjust the resources already allocated to the local bodies from where the new units were created.“We cannot take out budget from the local consolidated fund where a third of the allocated budget has been deposited,” said a Finance Ministry official. The new leadership at the local councils will need resources to prepare the annual budget.

Kewal Bhandari, chief of the budget division at the ministry, said one option could be to send reduced budget to the local units out of which the new units were carved in a readjustment of resources. There is also the possibility of the government allocating separate resources for new local units, officials said. The Ministry of Federal Affairs and Local Development has called for separate budget for the new local units.

If fresh budget is allocated to the local units, it must be under an equalisation grant as the conditional grant involving officials’ salary will not increase just because the number of local units has gone up.The government has allocated Rs148.63 billions in total under the equalisation grant for the 744 local units before the new units were created. Based on this figure, each local unit will receive Rs200 million on an average.“We will have to allocate fresh budget from the resources allocated under the ‘miscellaneous’ heading, which is allocated for emergencies,” said an official.

Published: 27-09-2017 07:57

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