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Fiscal federalism under question, claim local government actors

Local government actors have opposed the move of the federal government to reduce subsidies for local levels. They also plan to stage protests in Singha Durbar.

Surkhet: Local representatives have lambasted the decision of the federal government to lower subsidies allocated to local units. This move by the federal government, they say, is against the spirit of fiscal federalism.

They also claim that the government is posing a threat to the federal structure of Nepal. 

The federal government and provincial governments allocate funds to local governments under the Financial Equalization Grant. For that, the National Natural Resources and Fiscal Commission recommends grants based on seven different indicators.

The government has decided to reduce the amount allocated on this basis in the current fiscal year. The Cabinet meeting on January 9 decided to reduce the amount of the grant from the third installment on the basis of revenue collection.

Also, the Financial Comptroller General Office (FCGO) sent a letter to all Financial Comptroller Offices asking them to transfer not more than 74.11 percent of the allocated budget. 

Municipal Association of Nepal and National Association of Rural Municipalities have expressed their displeasure over the move to reduce the subsidies. They have appealed to the government not to take the patience of people’s representatives for granted.

‘We will protest in front of Singha Durbar’

People’s representatives at the local level have warned that they will protest against the move of the government. They have warned to shut down all local government offices across the country and come to Kathmandu to stage protests in front of Singha Durbar, the chief secretariat of Nepal’s federal government.  

“We will shut down the local  government offices and go to Singha Durbar to protest. We will probably start the protest at the end of May,” Bhim Prasad Dhungana, president of Municipal Association of Nepal, said. “Local leaders cannot go back to their constituencies because so much work remains pending because the contractors have not been paid.”

According to Dhungana, the move of the federal government to cut down resources for the local governments is unjust and unacceptable and  such a move makes a mockery of the federal system itself.

Dhungana further said: “We are toward the end of the fiscal year.  The local governments plan to complete all works, except those related to the disaster,  by mid-July. This is the time to make payment for the completed work. Naturally, contractors and user groups come to us and ask for money because they have to pay their workers. But how will we be able to pay them?”

(The above story written by Nabin Shahi is derived from Shilapaper, one of the local partners of Democracy Media Network.)