Central govt clueless about spending pattern of local units

Published On: January 18, 2018 03:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Jan 18: Though six months have passed since the formation of local governments, except in Province 2, the government does not have any idea about spending patterns of these local units.

Local governments have been implementing budget and programs selected on their own and endorsed by respective village and municipal councils. But there is no integrated reporting of such spending. 

All 753 local governments across the country have already received a total budget of Rs 150 billion in two tranches. They are receiving the last tranche of Rs 75 billion in mid-March. 

Financial Comptroller General Office (FCGO) is publishing daily budgetary spending reports of the central government and all its units. But the local levels are not yet connected in this reporting system, making the central government clueless about spending made by the local governments. There is confusion over the agency to which local governments have to be accountable.

“Though a significant amount has been disbursed to the local governments, there is no mechanism for reporting spending made by these local units. This is making it difficult for the central government to analyze spending pattern as well as priorities of the local units,” Jagannath Devkota, the spokesperson for FCGO, told Republica.

It is one of the reasons behind slow capital spending in the first half of the current fiscal year, officials like Devkota say.

Capital spending remained at a disappointing 14.45 percent of the allocated amount over the first half of Fiscal Year 2017/18 that ended on Sunday.
Government officials admit that there is no legal clarity as well as set formats to for reporting of spending made by the local governments. 

However, Local Governance Resource Book, issued recently by the Ministry of Federal Affairs and Local Development (MoFALD), categorically state that local governments should report their spending details to the federal finance ministry and provincial finance ministry as well as to National Natural Resources and Fiscal Commission. But this is yet to happen.

Dhaniram Sharma, chief executive of Kathmandu Metropolitan City (KMC), said that there is no separate reporting mechanism for spending of local governments. “However, we are reporting our spending details, particularly the grants received from the central government to the treasury office under FCGO every four months like in the past,” Sharma added. “We may report to the FCGO as started in the law from the next fiscal year.”

Rudra Singh Tamang, spokesperson for the MoFALD, said that other local governments are not following the reporting system like the KMC.

The Inter-Governmental Fiscal Transfer Act has stated that local governments must make a consolidated fund of all the resources they get, including fiscal transfer from the central governments, separately allocated revenue for the local levels, and other incomes and report spending made from the fund to the FCGO. But the government has not created any reporting mechanism, Tamang admits.

FCGO Spokesperson Devkota informed that the FCGO knows nothing about the transfer of budget form the central treasury to the accounts of local levels. There are also news reports that local governments have not set their spending priorities in a rational manner. This has been acknowledged by a meeting of the National Planning Commission (NPC) led by Prime Minister Sher Bahadur Deuba two weeks ago. 

In the lack of monitoring mechanism, the government even doesn't know the spending priorities of the local governments.

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