Kathmandu. A meeting of the Inter-Governmental Financial Council and thematic committees has decided to end the tendency of keeping the budget in ‘unbanda’ and to allocate the projects in an activity-wise manner. In order to end duplication and fragmented projects, the government has agreed to allocate budget only according to the set ‘threshold’ of development projects and to mandatorily implement the concept of ‘project bank’.
Finance Minister Dr. The meeting held under the chairmanship of Swarnim Wagle took various 16-point decisions to strengthen fiscal federalism.
The Finance Ministry has decided to forward the process of preparing the draft of amendment to the Intergovernmental Financial Management Act, 2074 and the law related to budget discipline. In addition, a real-time integrated financial information system will be implemented by integrating digital accounting and information systems to bring transparency in the financial transactions at the federal, provincial and local levels.
The new formula is to be implemented in order to increase the share of local levels in the royalty of electricity, mountaineering, forest and mines on the basis of the recommendation of the National Natural Resources and Fiscal Commission. Directives have been issued to coordinate among the three tiers of government to control revenue leakage and to immediately remove illegal taxes levied while transporting goods produced at one local level to another local level.
A decision has been taken to mandatorily implement the ‘contribution-based gratuity fund’ from July 17, 2083 to manage the payment of permanent employees of the province and local level after their retirement. According to the press release, all three tiers of government will strictly implement austerity policy to reduce the state’s current expenditure and administrative efficiency will be enhanced by reviewing the posts of employees.
The meeting has also decided to make arrangements for uninterrupted movement of tourists from neighbouring countries across the country after paying temporary import fee at the customs point for tourism promotion. Likewise, the meeting decided to request the Office of the Prime Minister and Council of Ministers to remove legal hassles seen in land acquisition for the construction of administrative buildings and government physical infrastructures.
Addressing the meeting, Finance Minister Swarnim Wagle expressed concern over the growing ‘grant-oriented’ tendency to depend on federal grants due to the weak revenue capacity of the lower tier government. He also expressed the commitment that the government would take concrete steps to end the financial divergence, make the Council result-oriented and to make financial transfers more transparent, predictable and equitable in the days ahead.
The meeting was attended by ministers of economic affairs and planning of all seven provinces, vice-chairman of the National Planning Commission, chairman of the National Natural Resources and Fiscal Commission, finance secretary, deputy governor of Nepal Rastra Bank and other high-ranking officials.
