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Among the 753 local governments, 33—11 municipalities and 22 rural municipalities—have failed to bring their budget for the fiscal year 2023/24 on time. According to Section 71 of the Local Government Operation Act, 2017, local governments are required to present their budget by Asar 10 (June 24/25) and have them passed by the end of Asar (July 15/16). 

On a positive note, Sudurpaschim province, which has 88 local units, has achieved a 100 percent record this year as all units passed their budget on time. In the fiscal years 2022/23 and 2020/21, Gandaki province had also set a perfect record. 

Meanwhile, Madhes province continues to have a poor track record. As the second largest province in terms of local units, Madhes has 136 governments, and 24 of them failed to pass their budgets on time this year. The number of local units missing the budget deadline in Madhes was 34 in 2020/21, 32 in 2021/22, and 28 in 2022/23.

Geeta Devi Mahato, the Vice-chairperson of Chandranagar Rural Municipality in Sarlahi district, Madhes, has accused Chairperson Raj Kumar Mahato of taking unilateral decisions without consulting others, resulting in the budget presentation delay. 

Raj Kumar, on the other hand, points finger at Geeta Devi and her team for the delay, claiming they refused to attend numerous meetings convened to address the issue concerning budget allocation. “They have been boycotting the executive committee and village council meetings without providing any valid reasons,” he says.

Disagreement between municipal heads and their deputies is the main reason behind the delay in budget presentation.  

ApEx reached out to many representatives from the local units that had failed to bring their budget on time, and they all had the same excuse, where mayors or chairpersons blamed their deputies and vice versa.

Four local units in Gandaki province, two in Lumbini and one each in Koshi, Bagmati and Karnali provinces also failed to meet the budget presentation deadline.

Ram Chandra Joshi, mayor of Kushma Municipality, Parbat district of Gandaki province, says that the budget process was obstructed because several ward chairpersons wanted more budget allocations for their areas. “There is no other reason to obstruct the budget presentation process other than to exert political pressure on me.”

Joshi says he lacks a majority in the executive committee and council, but the Local Government Operation Act, 2017 has not imagined a majority or minority provisions for local executives and councils. “Despite being aware of the law, the obstruction from executive committee members prevented us from presenting the budget on time,” adds Joshi.

The Municipal Association of Nepal (MuAN) says that the general public should not suffer due to the power struggles among local representatives. “A law should be passed so that those local units that fail to bring the budget on time are prohibited from spending even a single rupee from the state coffers,” suggests an official from the association.

Currently, the only repercussion faced by municipalities for delayed budget submissions is receiving reduced subsidies from the National Natural Resources and Fiscal Commission. 

“The commission allocates subsidies to local units based on their performance, with timely budget presentation and approval carrying weightage of five points each in the total score of 100 points,” says Gyanendra Paudel, the spokesperson for the commission. “In other words, higher scores lead to increased subsidies.”

Federalism expert and lawmaker Khim Lal Devkota, suggests redirecting the reduced subsidy of local units that fail to meet the budget deadline to neighboring municipalities.

“This measure could foster healthy competition among local representatives and encourage better performance,” he says. “Locals will also pressurize their representatives to perform their responsibilities if they see their neighboring areas doing well.”

Devkota highlights that this approach has been successfully implemented before Nepal adopted federalism, when District Development Committees (DDC) was in charge of budget allocation. Under the system, the government would reduce the subsidy of poorly performing DDCs and allocate it to more efficient and hardworking ones. The strategy significantly enhanced the work of most of the development committees.

“It is the only way I see to hold the elected local representatives accountable,” says Devkota.

Approximately 33 percent or one-thirds of the total federal budget, equivalent to around Rs 600bn, is allocated to the local level for this fiscal year. Untimely budget allocation negatively impacts local employment, income, and ultimately hampers the overall economic growth of the country.

Economist Chandra Mani Adhikari is opposed to the idea of reducing subsidies for non-performing local units, and suggests introducing other forms of punishment. “Why should the public bear the brunt of the representatives’ corrupt actions?” he says. “People should file a petition at the Supreme Court, as these actions are an assault on our system and a violation of the Local Government Operation Act, 2017.” 

Adhikari also warns that consistent failure of the local government to do their job well could fuel people’s resentment toward federalism.

Officials at the federal affairs department of the Ministry of Federal Affairs and General Administration say local governments are not under the ministry’s jurisdiction, that they are an elected entity chosen by the people. They say the ministry just facilitates the local units, and it is the job of the people to hold their municipal governments accountable.

Laxmi Devi Pandey, chairperson of the National Association of Rural Municipalities in Nepal (NARMIN) and the chair of Hupsekot Rural Municipality, claims that the association has repeatedly reminded local units and their representatives to do the job for which they have been sent by the people. “There is no need to obstruct the executive committee and council meetings because the failure to present the budget will harm the local economy and community.” 

Kamal Prasad Bhattarai, joint secretary and the spokesperson for the Ministry of Federal Affairs and General Administration, is hopeful that the local governments will get their act together in the coming years.

“The number of local units failing to submit their budget on time has decreased over the years, and this improvement is a result of adopting a ‘learning by doing’ approach,” he says. 

Between 2020/21 and 2023/24, there has been a decreasing trend in the number of local units failing to submit their budget on time. The figures for non-compliance were 46, 53, 42, and 33, respectively.

Bhattarai says the ministry has been guiding and training local representatives to execute their roles effectively by adhering to a fixed set of protocol.

The second meeting of the National Assembly on Thursday endorsed the Bill to amend some Nepal Acts.

The bill was brought with a purpose of taking action against those involved in usury by addressing the problems of victims.

The NA passed the bill again accepting the amendment to the bill related to usury sent by the House of Representatives with amendment and message.

On the occasion, Minister for Law, Justice and Parliamentary Affairs Dhanraj Gurung presented a proposal for the passage of the bill.

The bill was put to a decision after none of the lawmakers took part in discussion on the bill.

Now, the bill will be sent for the process of authentication.

NA Secretary Dr Surendra Aryal tabled the bill in today's first meeting.

The HoR had passed the bill with amendment on July 16.

The NA will next meet at 1:01 pm on August 3.

The Supreme Court on Thursday annulled the appointment of Koshi Province Chief Minister Uddhav Thapa.

Hearing the case filed against the Koshi government, a full bench of Justices comprising Ishwor Prasad Khatiwada, Ananda Mohan Bhattarai and Til Prasad Shrestha directed province Chief Parshuram Khapung to take ahead the process to form a new government within seven days.

The apex court issued the order to form the government again as per Article 168 (2) of the Constitution of Nepal.

The CPN-UML on July 7 had filed a writ at the Supreme Court arguing that the new government was formed in the Koshi Province in an illegal way.

UML Chief Whip Rewati Raman Bhandari on behalf of UML Koshi Province Parliamentary Party leader and outgoing chief minister Hikmat Kumar Karki had filed the writ demanding a mandamus order.

Hearing the writ filed against Koshi Province Chief Minister Uddhav Thapa, a joint bench of Justices Sushmalata Mathema and Til Prasad Shrestha issued an order to send the writ to the full bench.

After a preliminary hearing, a single bench of Justice Sapana Malla Pradhan issued an interim order not to take a decision that would have long-term effects on the Koshi Province government.

Province Chief Parshuram Khapung, Chief Minister Thapa and Speaker Baburam Gautam were made defendants.

Thapa was elected as the chief minister with the support of 29 lawmakers of Nepali Congress, 12 of CPN (Maoist Center), four of CPN (Unified Socialist) and one of Janata Samajbadi Party and Speaker Gautam.

The main opposition CPN-UML has demanded fair investigation into the smuggling of around 100 kg gold that had passed undetected through the TIA customs.

Speaking in today's meeting of the National Assembly, UML lawmaker Devendra Dahal demanded the formation of a probe committee comprising representatives of the government and various political parties in this regard.

"A high-level probe committee should be formed. If there is no fair investigation by forming such a committee, such incidents of smuggling will continue," he said.

In case of the formation of a parliamentary probe committee, it should also involve representatives of the members of the National Assembly, he said.

He also demanded the response from Home Minister and Finance Minister in the Parliament relating to the security of the airport and probity of customs office while calling for bringing the respective minister and the chief of the airport, and customs office employees under the scope of investigations.

Referring to the airport customs chief and the security chief, who stayed on leave when the gold smuggling took place, he suspected something fishy in the case.

Mentioning that a huge cache of gold was smuggled into Nepal through the airport on July 19, he said, gold smuggling is a serious issue.

"Nepal has become a transit for gold smuggling," he said.

Shortly after Dahal put forth his views, the UML protested the advancement of the Parliament business by the NA Chair Ganesh Prasad Timilsina.

Following the protest, Timilsina said that the schedule for NA members to put their view during the zero hour had been removed.