Representatives of local bodies picketed the Ministry of Finance at Singha Durbar on Sunday to protest against cuts in financial equalisation grants allocated to local bodies for the current financial year.
More than 150 mayors, deputy mayors and local government heads staged a sit-in at the ministry's main entrance and said they planned to meet Finance Minister Barsha Man Pun to present their demands.
The elected representatives said subsidy cuts by ministries have affected local government service delivery and development projects across the country.
They staged the protests demanding the release of funds. They said thousands of projects under construction across the country have been stalled due to the government's decision to cut subsidies by around 26 percent. Expressing their anger, they said they would have no option but to intensify their protests if the subsidies were not released immediately.
Bhim Dhungana, president of the Nepal Municipalities Association, accused the federal government of ignoring their requests not to cut subsidies.
According to the 2023/24 budget, Rs58.67 billion and Rs87.35 billion were allocated to state and local governments respectively, based on the recommendations of the National Natural Resources and Finance Commission. However, of the 25 percent that was meant to be given to local governments as the third instalment, only 7 percent was actually paid.
On May 25, the Financial Auditor General instructed its subordinate agencies to release up to 74.11 percent of the equalization fund. Based on this instruction, subsidies to local governments for this fiscal year have been reduced by 25.89 percent.
A similar letter was sent in early February, seeking a reduction of up to 55.73% of the grant amount. At the time, the office had ordered cuts to grant amounts based on revenues through mid-January.
Dhungana said the government was ignoring the issue of subsidy disbursement despite the financial year coming to an end.
