The Karnali government has tightened the budget implementation process for the current fiscal year to ensure greater transparency, accountability, and results. The provincial government has issued 27-point budget implementation guidelines to all 79 local governments in Karnali, covering intergovernmental financial transfers, revenue sharing, project and program implementation, as well as accounting, reporting, and auditing.
According to Ravilal Sharma, Secretary at the Ministry of Economic Affairs and Planning, one-fourth of the financial equalization grant will be released in four installments—in August, October, January, and April. The guidelines allow the provincial government to reduce, withhold, or control transfers depending on the province’s economic situation, revenue status, grants received from the federal government, and the balance of the provincial consolidated fund.
The Ministry of Economic Affairs may request financial and physical progress reports for projects and programs funded through provincial transfers. Local governments that fail to provide the required reports risk having their grants withheld. Conditional, supplementary, and special grants must be used solely for the designated project or program and cannot be diverted elsewhere.
Under the guidelines, 60 percent of revenue from advertisement taxes, tourism fees, and natural resources such as stone, gravel, and sand must be retained by the local government, while the remaining 40 percent must be deposited monthly into the provincial consolidated fund. Failure to do so will result in deductions from the local government’s financial equalization grant. Similarly, the provincial government will transfer 40 percent of vehicle tax revenue to local consolidated funds, in accordance with the National Natural Resources and Finance Commission’s determination.
The guidelines also set conditions for program and project implementation. If a local government wishes to amend a conditional grant-funded project, it must request approval from the provincial government with a clear justification, ensuring that neither the subject area nor the budget changes. Such amendments can be made only until mid-Dec 2025. Furthermore, political party office bearers, elected representatives, their family members, construction entrepreneurs, and civil servants are barred from serving on consumer committees. Projects assigned to consumer committees cannot be implemented—directly or indirectly—through construction entrepreneurs.
All local governments in Karnali must submit income and expenditure reports for fiscal year 2024/25 to the provincial accounting unit in the prescribed format by mid-July. Failure to do so will result in suspension of revenue distribution and grants for the fiscal year. The provincial government has also directed that information boards be installed for every project and program.
