Raj Kumar Sah, newly elected chairperson of Dhanauji Rural Municipality in Dhanusa, is quite aware that development projects in his local unit have suffered over the past years because local officials failed to bring the annual budget on time.

“Development projects faced delays because the rural municipality failed to award contracts on time due to delayed budget presentation,” said Sah. “I don’t want to see a repeat of that. So I will work to ensure that the budget this time is presented on time as mandated by the law.”

According to him, Dhanauji had presented the budget for the current fiscal year 2021-22 only in January, after a delay of around six months.

As per the Intergovernmental Fiscal Arrangement Act-2017, municipalities and rural municipalities are required to present their budget for the next fiscal year by Asar 10 (around June 24) every year. The federal government presents its budget on Jestha 15 (around May 29).

“The delay in budget presentation in the past years was due to differences among the wards over sharing of resources,” said Sah. “But this time, my party has a majority in the rural municipality, so I hope there won’t be disputes and delays.”

Sah was elected on a Nepali Congress ticket. This time our party won four ward chairs, up from two last time. “So it will be easier to make decisions through the village assembly and present the budget,” he said.

Rajgadh Rural Municipality is another local unit in Saptari district which struggled consistently to present its budget. After disputes and delays, it could present the annual budget only in September, three months later than schedule.

“I want to improve things this time,” said Om Prakash Mandal, the newly elected chairperson of the rural municipality. Mandal is from the UML and his party has won three ward chairs out of the six.

“It is difficult to forge consensus when you have representation of various parties in the executive body and the assembly, but this time it will be easier to pass the budget since my party leads half the wards.”

Delay in budget presentation not only hindered local development activities but local governments themselves could not start spending the federal allocations. Last year, employees of most local governments saw their salaries delayed by several months.

For example, staffers of the Tirahut Rural Municipality in the district had not received their salaries since the start of the fiscal year [mid-July last year] until the Dashain festival in October due to delay by the rural municipality to present its budget on time. Hemanta Kumar Behadkher, the then chair of the rural municipality, had told the Post last year that he planned to present the budget only after the Dashain festival.

Legally, governments—federal, provincial and local—cannot spend without passing their budgets through their respective assemblies—federal parliament, provincial assembly, and municipal assemblies, respectively.

Last year, the country witnessed a government shutdown after the bill to replace the budget ordinance could not be passed by the House of Representatives and National Assembly on time.

According to the Ministry of Federal Affairs and General Administration, which is the contact ministry for the local governments, most local administrations since the 2017 elections had failed to present their budgets on time. Until June 6, four local governments had not reported to the Federal Affairs Ministry whether they presented their budgets for the current fiscal year.

In July last year, the Federal Affairs Ministry had asked the Finance Ministry to bar local governments from spending funds until they present their new budgets. But the request was not followed.

The National Natural Resources and Fiscal Commission has made a timely presentation of the budget by the local governments as one of the conditions for allocating grants from the centre since last year.

On a 100-point scale, timely budget presentation and approval alone will ensure a local government 10 points. Based on the score received by a local government, the commission recommends the amount of fiscal transfer to be made to the local government by the federal government.

Despite these warnings, some local governments have continued to defy the law. In this context, the ministry, which is planning to train the newly elected people’s representatives starting Wednesday, has made budget preparation and presentation the primary agenda.

Basanta Adhikari, spokesperson for the ministry, said the people's representatives would be trained on how to prepare the budget which they should present by Asar 10 (June 24). “As the majority of elected local representatives are new faces, we need to train them from the scratch,” said Adhikari.