Local levels confused about budgeting process

Kathmandu, June 6:

The newly elected chiefs and other representatives are applying their own novice ideas to prepare the budget for the coming fiscal year 2018/19 for their respective local bodies.

Many local bodies have just initiated the budget process, but they lack clear guidelines and guidance in formulating the budget according to the format suggested by the federal government. It demands that every level of government prepare its budget using the Mid-Term Expenditure Framework (MTEF) as a tool.

The MTEF, which is applied by many countries around the globe, is a three-year rolling expenditure planning of each level of government. It sets out the medium-term expenditure priorities and budget constraints, against which sector plans can be developed and refined.

Since it's their first experience in formulating a budget for their respective local bodies, the chairmen and vice-chairmen of the rural municipalities, mayors and deputy mayors of municipalities, sub-metropolitan cities and metropolitan cities as well as the ward chairmen are confused about the budgeting process.

Chiefs of some of the local bodies, while talking to The Rising Nepal, said that they needed technical support in making the budget, but the assistance has not reached them yet, even though the National Planning Commission (NPC) and the Ministry of Finance (MoF) had plans for it.

Mayor of Dakshinkali Municipality of Kathmandu district Mohan Basnet said that the municipality has just initiated formulating the budget after it received the budget ceiling.

"We are well aware that we are lagging behind in creating the budget for the next fiscal year. The municipality office has received some templates, but we are still struggling to grasp the idea as a whole," he said in a telephonic conversation.

Mayor of Surkhet Municipality in mid-west Nepal Dev Kumar Subedi said that his government was mulling over the prospective income sources to manage the expenditures.

Local bodies have the integrated property tax, house rent tax, tourism and natural resources as their major income sources while some have sand and gravel and other sources as well.

But Subedi said that the major part of their budget was dependent on the grants provided by the federal government. The central government sends grants under different headings: fiscal equalisation, conditional, special and matching.

Ram Prasad Regmi, chairman of ward No. 2 of Gandaki Rural Municipality of Gorkha district in west Nepal, said that his local body hadn't received any support required for capacity enhancement in terms of budget formulation.

Most of the representatives have no idea about the MTEP, let alone applying it in the budget making, he said.

Regmi stressed on the need to immediately run programmes to build the capacity of the local bodies in order to make them capable of identifying the prospective income sources, or developing them, and utilising the available resources to manage the expenditures.

Similarly, Shiva Chitrakar, chairman of ward No. 5 of Bidur Municipality of Nuwakot district, said although the municipality has identified some sources of revenue, they have yet to develop a plan for the sustainable exploitation of such resources.

Spokesperson at the MoF Jhakka Prasad Acharya said that although there had been some discussion among the MoF, NPC and the Ministry of Federal Affairs and Local Development about building the capacity of local governments, the initiative is yet to be implemented.

According to NPC sources, although it had planned to go to every local unit, it has failed to do so this year.

Published in The Rising Nepal daily on 7 May 2018.