Donors likely to downsize assistance to local bodies

Bishnu Prasad Aryal
Kathmandu, July 17



The fate of a country-wide development programme appears to hang in a balance as donors sound out plans to review their commitment, unhappy about irregularities and mismanagement of the funds in the absence of elected local bodies.



Donors supporting the Local Governance and Community Development Programme (LGCDP) have indicated that they would slash their fund citing lack of accountability and fiduciary risk management in the local bodies, according to Ministry of Federal Affairs and Local Development (MoFALD) sources.


The development partners have not been satisfied with the governance system in the local bodies and have raised serious concerns about the misuse of development funds, sources said. "They have been demanding a sound mechanism, including fiduciary risk management, and an accountable body to check irregularities in the local bodies," MoFALD officials said.


They have committed to provide only about US$ 100 million till date for the second phase when the government has planned to bring some US$ 1300 million programme that the government will contribute US$ 1058 million and remaining about US$ 300M by donors. "The donors have assured us that they will assist three times bigger amount if the local elections are held," said Puroshottam Nepal, programme coordinator of the LGCDP at the MoFALD.



LGCDP, originally conceived between July 2008-January 2009, was re-designed into a four-year programme supported by a host of development partners comprising several European countries, the World Bank and the UN System in Nepal. The first phase of LGCDP concluded on July 15, 2012 and no cost tenure was extended till July 15, 2013 in order to prepare policies and programmes for the second phase and sign agreement. The second phase was supposed to start on July 16 to July 15, 2017.



The joint financing agreement with the development partners is yet to be signed. As on date, LGCDP runs into its second phase unofficially, said ministry sources as they looked forward to the signing of renewal agreement for the remaining period.

"The government is negotiating with donors and is in process of signing a renewal agreement," Local Development Secretary Shanta Bahadur Shrestha told The Himalayan Times.

However, programme coordinator of LGCDP Purushottam Nepal sounded more optimistic about the future of the second phase programme. "A draft agreement has been prepared and it will be signed by August," he said.


"The size of budget from the development partners may decrease this time due to absence of elected representatives in the local bodies," ministry sources said. The local bodies elections were held last time 16 years ago.


The total budget comprising of government of Nepal US$ 260.8 million (Block Grant Allocation to LBs) and donors commitment US$ 161.5 million was planned to invest in the first phase of the LGCDP. The development partners include Asian Development Bank, DANIDA, DFID, UN System (UNDP, UNICEF, UNCDF, UNFPA, UNV etc.), Government of Norway, Swiss Development Cooperation (SDC), GIZ, JICA, World Bank and Government of Finland.
However, the donors did not provide all the committed assistance of the first phase for the local bodies, citing irregularities in the local bodies, according to the MoFALD sources.

Out of about Rs 45 billion budget allocated for the MoFALD annually, development partners contribute about Rs 15 billion for 75 districts, 3,915 village development committees and 58 municipalities across the country.

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Ex-minister 'doled out money' to cadres

Narayan Kaji Shrestha gave away development funds

BISHNU PRASAD ARYAL

KATHMANDU: The Ministry of Federal Affairs and Local Development has been found to have violated the rules, with the direct involvement of the former local development minister Narayan Kaji Shrestha, by distributing development funds among those close to his party.

According to the MoFALD, Rs 500 million of people’s participatory programme of the current fiscal year was distributed for 723 projects under the direct supervision of local development minister in the current fiscal year. Of the total budget of PPP of Rs 500 million, MoFALD contributes Rs 200 million while the rest is covered by the Ministry of Finance.

It has been revealed that former deputy prime minister and local development minister Shrestha distributed the development funds among UCPN-M cadres, in the name of constructing martyrs’ memorial buildings and parks, according to sources at the MoFALD. The Cabinet that had Shrestha as minister was replaced by the Khil Raj Regmi-led Cabinet on March 14. As per the rules, the minister can distribute up to Rs 500 million of PPP through the plans approved by district development committees. However, the funds were distributed arbitrarily among those who approached Shrestha personally, in violation of the existing rules, high ranking MoFALD officials told this daily requesting anonymity.

Regular irregularities
• Gaurishankar Khadka Smriti Pratisthan, Jhapa, Rs 500,000
• Jaya Gobind Sah Smriti Pustakalya, Mahottari, Rs 1,500,000
• Sahid Pratisthan, Rasuwa, Rs 100,000
• Sahid Smriti Bhawan, Bidur, Rs 100,000
• Sahid Smriti Sanchar, Dhading, Rs 500,000
• Shahid Pratisthan Nepal Shakha, Rolpa, Rs 2,500,000
• Different youth clubs in Ropla, Rs 4,000,000
• Siddha Tirtha Smriti Bhawan and Park, Kavre Rs 500,000
• Sahid Smriti Park, Jipupipal, Rukum, Rs 500,000
• Sahid Smriti Park, Kankridobhan, Rukum, Rs 500,000
• Sahid Smriti Park, Pyuthan, Rs 500,000

Rs 500 million of PPP can be given only for development activities of public concerns. As per the rules, such programmes are generally selected through DDCs on the basis of recommendations from other line ministries and the National Planning Commission. Memorandums submitted to high ranking officials after their field visits also need to be taken into consideration. “But the programmes were directly selected by then minister Shrestha in January-February,” the officials said. The government provides funds to national institutions such as Ganesh Man Singh Memorial Academy, Manmohan Singh Memorial Academy and Krishna Sen Ichchhuk Memorial Academy. But the development funds cannot be given to cadres of certain political parties. “We have been told that the funds allocated to different organisations were given to construct office buildings of a political party and to the cadres on one pretext or the other,” the officials added.

MoFALD Spokesperson Dinesh Kumar Thapaliya, said that the budget from the central level can be spent only on activities related to public infrastructure development and social development. “We will monitor them and will take necessary action if they are found illegal,” Thapaliya said in a style typical of bureaucracy.

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Govt shifting development grant focus to Tarai

 • Plans to slash funds given to hill and mountain regions • Experts call it an irrational move

BISHNU PRASAD ARYAL

Fast facts • Tarai belt constitutes a little more than half of the total population of the country (50.2 per cent) • Hill and mountain belts constitute about 42.8 per cent and seven per cent of the total population‚ respectively • The Ministry of Federal Affairs and Local Development gets Rs 45 billion every year • As per the rule‚ each of the 3‚913 village development committees get Rs 1.5 million to Rs 3 million as grants • Each of the 75 district development committees get grants on the basis of performance • New rule says performance-based grants to the local bodies will be reduced‚ implying that each VDC will get only Rs 1.5 million and each DDC Rs 4 million

KATHMANDU: The Ministry of Federal Affairs and Local Development is planning to cut development grants given to the hills to provide the same to the Tarai region.

According to the national census 2011, the Tarai belt, smaller in area, constitutes more than half of the total population of the country (50.2 per cent) followed by the hill and mountain belts that constitute about 42.8 per cent and seven per cent of the total population, respectively.

“The remote hill and Himalayan regions, where poverty-stricken, marginalised and underprivileged people live, will be affected if the government’s plan to slash development grants is implemented,” said Dinesh Chandra Devkota, former vice-chairman of the National Planning Commission. “It will be an irrational move as marginalised people living in hills like Karnali region will be affected.”

The ministry is preparing to change the rules provisioned in the Local Bodies Resource Mobilisation and Management Guideline 2069 BS under the influence of minister for local development, Madhes-based parties and Unified CPN-Maoist, confidential sources at the ministry told The Himalayan Times. “This is a plan to spend more development budget in Tarai by cutting grants given to the hilly and Himalayan regions,” they said. “The government is planning to include this programme in the coming fiscal budget and programmes are being prepared for the coming year.”

THT’s repeated attempts to contact Minister for Federal Affairs and Local Development Bidhyadhar Mallik went in vain. He neither picked up his phone nor responded to emails.

The government allocates about Rs 45 billion for the MoFALD every year. Of the total allocation, about 70 per cent is spent on development activities and people-oriented programmes while rest is set aside for administrative purposes, according to the MoFALD.

Development grants are allocated as per provisions enshrined in the rules and regulations. Highly placed sources at the ministry told this daily that the plan was being chalked out with more focus on Tarai region in the name of population distribution.

Dinesh Kumar Thapaliya, Spokesperson for the MoFALD, conceded that the ministry was working to amend the rules. “This rule can be revised every two years,” Thapaliya said. “We can concentrate on densely populated areas while distributing grants,” he added.

The proposed plan will revise the existing system and send more budget to Tarai-based districts. Out of the total allocated capital expenditure, 50 per cent will be distributed on the basis of formula-based grants and remaining as per minimum conditions grants, according to the Local Bodies Fiscal Commission Secretariat.

Each of the 3,913 village development committees used to get Rs 1.5 million to Rs 3 million as grants while each of the 75 district development committees used to get grants on the basis of performance.

The performance-based grants to the local bodies will be reduced as per the new rule, which means each VDC will get only Rs 1.5 million and each DDC Rs 4 million.

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