KATHMANDU: The Ministry of Federal Affairs and General Administration has launched a rapid intervention to break a budget impasse that has stalled governance in a number of municipalities and rural municipalities well into the new fiscal year.
Acting under the directive of Minister Bhagawati Neupane, the ministry will deploy three facilitation teams from August 5, led by joint secretaries Kaliprasad Parajuli, Prakash Dahal, and Rudra Singh Tamang, to conduct on-the-ground consultations with local governments.
The move comes after weeks of concern that some local governments, including sub-metropolitan cities, municipalities, and rural municipalities, have yet to pass their annual budget and programs for the current fiscal year, in direct violation of constitutional and legal deadlines.
These delays have frozen development activities and disrupted basic service delivery in affected areas, prompting the ministry to take a more hands-on role than usual in what is constitutionally a domain of local autonomy.
According to a ministry statement, the facilitation effort will be coordinated with the National Association of Rural Municipalities of Nepal, the Municipal Association of Nepal, and relevant district coordination committees. The stated aim is to resolve disputes and procedural bottlenecks through dialogue, paving the way for budgets to be passed and implemented “at the earliest.”
Under Nepal’s 2015 Constitution, local governments enjoy significant fiscal autonomy. Article 59 guarantees their right to exercise financial powers, while Article 60 ensures an equitable distribution of revenue sources. This framework is designed to make financial independence a cornerstone of federalism, backed by constitutional safeguards for both revenue generation and fiscal discipline.
The law is explicit on timelines and procedures. Article 230 of the Constitution requires rural and municipal executives to present an annual estimate of revenue and expenditure to their respective councils for approval.
The Intergovernmental Fiscal Arrangement Act, 2017, further stipulates that local bodies cannot spend from their consolidated fund, except for unavoidable expenses, without budget approval. The Local Government Operations Act, 2017, mandates that the executive present its budget by mid-June (Asar 10) and secure passage by the end of June (Asar 30).
These provisions are not mere formalities. Timely passage of local budgets is critical for maintaining governance continuity, ensuring uninterrupted public services, and upholding transparency in resource allocation.
Yet the failure of some local governments to meet these legal obligations points to deeper issues, including political deadlock in local assemblies, capacity deficits in administrative staff, and in some cases, outright neglect of legal responsibilities.
The ministry’s intervention reflects a delicate balancing act in Nepal’s federal structure. While the Constitution enshrines the autonomy of local governments, the Ministry of Federal Affairs is also tasked, under the Government Business Rules, 2017, with maintaining coordination between federal, provincial, and local levels. In stepping in to facilitate stalled budgets, the ministry is exercising its coordination mandate, but the move inevitably raises questions about the limits of federal oversight in a system designed to empower local decision-making.
Analysts note that repeated budget delays at the local level could undermine public trust in federalism itself. One of the key promises of the post-2015 constitutional order was that local governments would have the resources and authority to address community needs more efficiently than a distant central bureaucracy. If local councils cannot even pass budgets on time, the credibility of that promise suffers.
