Foreign-funded projects to go to local levels from next fiscal

Published On: February 18, 2018 10:55 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 18: Most of the donor-funded programs and projects have not been transferred to local levels and provinces as promised in the annual budget, due to lack of mechanism for disbursement and performance reporting. 

According to the government officials, transfer of these programs and projects, including some major infrastructure projects, is not going to happen until next fiscal year that begins in mid-July.

The government in its annual budget speech had announced that it would allocate projects of up to Rs 5 million to rural municipalities, Rs 10 million to municipalities and Rs 20 million and above to sub-metropolis and metropolis levels. 

Most of those projects including drinking water, irrigation, road, and construction of public offices in the quake-hit districts are now being implemented from the center. 

The National Planning Commission (NPC) is now categorizing projects and putting them under three categories to be implemented by the federal, provincial, and local governments, while the Ministry of Finance is working to formulate the modality of disbursement of funds and project monitoring. 

More than half of the development projects are financed through foreign aid and grants. 

Talking with Republica, Swarnim Wagle, vice-chairman of National Planning Commission, said that the government was close to set the cut-off time to December 2018 for completing donor-funded projects by the central government. After that, the projects would be transferred to provincial and local levels. 

“Giving some more time to complete those projects is for saving costs,” Wagle said. 

The projects could not be immediately transferred to local bodies as the local levels were not well equipped to handle those projects, sources at the MoF said. 

However, development partners and bureaucrats have apparently shown little interest to allocate the projects to local and provincial bodies. Development partners have been blaming lack of fund disbursement modality and reporting mechanism of the projects while bureaucrats are reluctant to leave the Kathmandu Valley where they have stayed long in the unitary system of government. 

It is a fact that the budget allocated for local levels are for equalization grants and the fund disbursement to local levels are not happening via the government’s centralized single treasury account. There is no system for reporting of spending by local levels to the center yet.        

Meanwhile, the Ministry of Finance is also working to revise Development Cooperation Policy to align it with the federal set up.

Spokesperson for the Ministry of Finance, Arjun Prasad Pokhrel said that the projects will be transferred to local levels and provinces based on the NPC’s categorization.

“Development Cooperation Policy will be revised in a way to facilitate implementation of projects through all three tiers of governments,” Pokhrel said. 

Although a few small-scale foreign aid projects have been transferred to the local levels, it has only created confusion due to lack of reporting modality and disbursement mechanism of the funds. 

According to the constitution, the central government decides all the matters related to foreign loans and grants, and distributes the same to sub-national governments for implementation.

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