Federal govt to be more prudent in grant transfer

Kathmandu, September 1

It seems the federal government has become more cautious when it comes to transferring grants to the lower layers of administration, as funds piled up in the treasuries of the sub-national governments while the federal government faced resource crunch in the previous fiscal year.

To avoid a similar situation, the federal government has introduced some necessary conditions that sub-national governments need to follow from now on to receive grants from the central government.

As per the new provision, the federal government can defer the schedule of transferring equalisation grant to the sub-national governments if the lower layers of administration do not submit details of expenses to the concerned Treasury Controller Office within the scheduled timeframe.

Issuing a guidance for the sub-national governments, the Ministry of Finance (MoF) has said that the details of the expenses made are prerequisite for the transfer of equalisation grant from Financial Comptroller General Office (FCGO) — the government agency that keeps account of the revenue and expenses.

The fiscal budget of the current fiscal year has provisioned equalisation grant transfer to the sub-national governments in four instalments. The schedule for the transfer of equalisation grant are August 10, October 19, January 16 and April 16, as per MoF. “If the details of the expenses are not submitted a day before the grant transfer schedule, then the grant transfer schedule can be deferred from the next tranche.”

The FCGO will not transfer the equalisation grant until the details of the expenses details are submitted.

Likewise, conditional grant to the sub-national governments will be transferred every quadrimester based on the expenditure of each sub-national government. However, one-fourth of the total grant is transferred on the first day of the fiscal year calendar.

Similarly, the federal government will develop a working procedure for the matching fund grant and special grant at the earliest to transfer the earmarked fund in fiscal 2018-19.

In addition, if the conditional, matching fund and special grants remain unspent at the end of the fiscal year, the remaining amount will be adjusted in the next fiscal’s grant transfer, as per the guidance that MoF has issued for the sub-national governments.

Conditional grant must be spent on the committed liability of the government, like health, education and sanitation, which are basic services guaranteed by the government. The sub-national governments are barred from reallocating funds that have been transferred under the conditional grant to other projects. The federal government transfers equalisation grant to the province and local level on the basis of their need for expenditure and revenue capacity.

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