Fiscal transfers to sub-national governments reduced

KATHMANDU: In a clear indication of the challenging state of the economy, the government has made reductions in financial transfers to provincial and local governments.

The federal government provides budget under four headings – equalization grant, conditional grant, complementary grant and special grant – to provincial and local governments –

Presenting a budget for the fiscal year 2023/24 on Monday, Minister for Finance Dr Prakash Sharan Mahat announced that the government has allocated Rs 58.67 billion for provincial governments and Rs 87.35 billion for local governments as equalization grants. In the current fiscal year, the government has allocated Rs 61.43 billion to provincial governments and Rs 100.23 billion to local governments as equalization grants.

Similarly, the government has allocated Rs 35.72 billion for provincial governments and Rs 191.91 billion for local governments under conditional grants for the fiscal year 2023/24. The provincial and local governments have received Rs 57.17 billion and Rs 183.72 billion, respectively, under conditional grants in the current fiscal year.

Under complementary grants, the government has set aside Rs 6.22 billion for provincial governments and Rs 7.05 billion for local governments for 2023/24. In the current fiscal year, Rs 6.3 billion and Rs 7.27 billion have been allocated for provincial and local governments, respectively, as complementary grants.

Similarly, special grants of Rs 4.46 billion for provincial governments and Rs 8.73 billion for local governments have been allocated for the upcoming fiscal year. In the current fiscal year, the government has disbursed Rs 4.56 billion and Rs 9.14 billion, respectively, for provincial and local governments under special grants.