103 local bodies fail to present budgets two months into fiscal year

KATHMANDU: Two months into the fiscal year 2024-25, 103 out of 753 local bodies in Nepal have yet to present their budgets, despite the legal requirement to do so by June 25, according to the Intergovernmental Fiscal Arrangement Act 2017. The act mandates that local bodies submit their budgets to their respective councils within the fiscal deadlines, but over two months after the deadline, many remain non-compliant.

This year, 103 municipalities have failed to meet the deadline, surpassing last year’s figure of 42. The Ministry of Federal Affairs and General Administration reports that none of the local municipalities across Nepal’s seven provinces have fully presented their budgets, indicating a significant delay in fiscal planning.

In Madhesh Province, 47 out of 136 municipalities have not presented their budgets. The situation is similar in Koshi Province, where 123 out of 137 local bodies remain without budgets, and Bagmati Province, with 103 out of 119 municipalities yet to comply. Other provinces have also faced delays: Gandaki (82 out of 85 municipalities), Lumbini (95 out of 109), Karnali (74 out of 79), and Sudurpashchim (84 out of 88) have incomplete budget presentations.

Gandaki Leads, Madhesh Lags Behind

Gandaki Province has the highest compliance rate, with 96.5% of its local bodies having presented their budgets. In contrast, Madhesh Province shows the weakest financial governance, with only 65.4% compliance, reflecting concerns about fiscal responsibility in the region.

Despite the clear mandate that local bodies must present their budgets by the end of June, many municipalities are struggling to comply. As of September 5, 103 municipalities remain without budgets. This delay in budget presentation has halted essential administrative operations and disrupted the rollout of annual programs, creating challenges for local governance.

Provisional Budget Rule Ignored

The National Natural Resources and Fiscal Commission requires municipalities that fail to pass their budgets to submit a provisional one in accordance with legal obligations. However, most local bodies that have missed the deadline have neither submitted a provisional nor a complete budget.

The commission has stated that failure to present a budget leads to the suspension of financial operations in municipalities, which in turn halts daily administrative functions and the implementation of development projects.

A source at the commission emphasized the importance of delegating financial authority: “Local bodies that fail to present a budget must grant financial authority to the municipal head within seven days of the assembly’s conclusion. Without this, they cannot operate their accounts.”

For instance, Godawari Municipality was unable to present its budget due to a legal case against the mayor. The issue has now been resolved, allowing the municipality to move forward.

The delays have placed a strain on managing daily operations in several municipalities, as ongoing administrative expenses remain unfunded. Without proper budgeting, the ability to provide public services, execute development projects, and manage local resources remains severely constrained.

The lack of financial discipline and governance continues to be a pressing concern across Nepal’s local bodies.