Local governments that failed to present their respective budgets for the fiscal year 2024/25 by June 24, as required by law, will face cuts in the fiscal equalization grants provided by the federal government.

According to the National Natural Resources and Fiscal Commission, 39 local governments that did not present their budgets to their respective municipal or village assemblies within the stipulated time frame will see a five-point deduction in the evaluation criteria used to allocate the next fiscal year’s equalization grants.

As per the Intergovernmental Fiscal Arrangement Act, all local governments are required to present their revenue and expenditure estimates for the upcoming fiscal year to their respective municipal or village assemblies by June 24 and have them approved by mid-July. However, 39 out of the 753 local units failed to present their fiscal budgets this year.

The National Natural Resources and Fiscal Commission evaluates the performance of local governments on a 100-point scale based on 17 indicators. Federal grants distributed among local governments are based on these indicators.

So far, 714 local units have submitted their budgets to their respective assemblies by the stipulated time frame of June 24. However, many of them have not submitted their budget details to the portal maintained on the official website of the Ministry of Federal Affairs and Local Development.

As of Sunday, only 454 local units have submitted their budget details to the portal. According to the ministry, 48 local units in Koshi and 76 in Madhesh have not uploaded their budget details to the portal. Similarly, 43 local units in Bagmati, 27 in Gandaki, 47 in Lumbini, 25 in Karnali, and 33 in Sudurpaschim provinces have yet to upload their budget details to the portal.

There are six metropolitan cities, 11 sub-metropolitan cities, 276 municipalities, and 460 rural municipalities in the country. Of these, one metropolitan city, one sub-metropolitan city, and 22 municipalities have failed to present their budget for 2025/26. Kathmandu Metropolitan City and Dharan Sub-metropolitan City failed to present their budgets within the stipulated timeframe due to disputes among elected representatives.

Most of the non-compliant municipalities are in Madhesh Province. Sixteen out of 77 municipalities in the province failed to present their budgets by the stipulated deadline of June 24. Similarly, four municipalities in Bagmati, two in Lumbini, and one each in Koshi and Karnali also failed to present their budgets. All municipalities in Gandaki and Sudurpaschim have presented their fiscal budgets.

Likewise, all rural municipalities in Koshi and Sudurpaschim provinces have presented their budgets. However, nine rural municipalities in Madhesh, two each in Lumbini and Gandaki, and one each in Bagmati and Karnali failed to present their fiscal budgets.