KATHMANDU, Dec 6: A total of 15 local governments have failed to endorse their financial plans after almost five months of the current fiscal year (FY) have passed.
The state’s law has mandated the local governments to announce their budget by June 24 (Asar 10 of Nepali month) every year. However, 28 local bodies just endorsed their budgets last month.
According to the Ministry of Federal Affairs and General Administration (MoFAGA), all the 15 local bodies failing in this regard were from Madhesh Province. They are found breaching the state rule mainly due to lacking political consensus.
This incident has been a perennial problem in almost every FY. In the FY 2024/25, 10 municipalities and 22 rural municipalities failed to bring their budgets throughout the year. Out of these, 25 local bodies were from Madhesh Province.
The Intergovernmental Fiscal Arrangement Act 2017 has asked the village executive and municipal executive to submit the estimates of revenues and expenditures of the following fiscal year in the stipulated time whereas they need to endorse the budget by mid-July. As of now, only 738 local bodies have submitted their financial plans to the Line Ministry Budget Information System of the federal government.
If the local bodies fail to receive approval for their budget on time, they can't collect revenue, pay salaries and execute their development plans and programs. In addition, they cannot get the grants from the federal government. The delay in budget announcement may also give rise to soaring arrears as the local bodies may not exhaust their financial resources fulfilling the due processes.