Provincial finance ministers meet in Surkhet to address fiscal federalism

Economic affairs and planning ministers from Nepal's provinces met in Birendranagar, Surkhet, on Monday for a meeting of the Provincial Economic Affairs Council on putting fiscal federalism into practice and improving coordination between the tiers of government. The meeting was held at the Karnali Province Training Academy.

Karnali Province Chief Minister Mangal Bahadur Shahi inaugurated the meeting, which Karnali's Minister for Economic Affairs and Planning, Tek Raj Pachhai, chaired. According to Onlinekhabar, the agenda covered the provinces' own revenue, revenue sharing, the present state of fiscal transfers between governments, and ways to improve capital spending while keeping recurrent spending frugal. Provincial secretaries were to present papers on their provinces' finances, the outlet reported.

Annapurna Post reported that the ministers voiced dissatisfaction with the federal government, arguing that nearly a decade into federalism the provinces still depend on the centre for resources and powers, and that they issued a joint commitment. As the paper set out their demands, they ask the federal government to respect the powers the constitution gives the provinces, to stop cutting fiscal equalisation grants in the middle or at the end of the fiscal year after they have been budgeted (the cuts are justified by weak revenue collection), and to stop running projects that fall within provincial or local jurisdiction. Pachhai said that when budgeted grants are not released in full, provincial plans and programmes suffer. The ministers also want a larger share of value-added tax and excise revenue for provincial and local governments.

According to the same report, the provinces also want the process of adjusting provincial police completed immediately, the Federal Civil Service Act issued without delay, and the formula the National Natural Resources and Fiscal Commission uses to distribute grants reviewed so that it rests on population, geography, human development, revenue capacity and actual spending needs.

Reports differed on who attended. Onlinekhabar and Annapurna Post said ministers from all seven provinces took part, and Onlinekhabar listed Sudurpashchim among the participating provinces. Gorkhapatra and Shilapatra, in reports on the opening of the meeting, said ministers from six provinces attended and that Sudurpashchim's minister was absent. The reports do not settle the difference.

1. Khim Lal Devkota, chair of the Federalism and Localization Center, was scheduled to present a paper on coordination between the tiers of government. Onlinekhabar's schedule also had the meeting review decisions of earlier council meetings and Karnali hand the council's chair to Koshi Province at the close. According to Shilapatra, the conclusions are to be reflected in the coming policy, programme and budget of all seven provincial governments.