Six months into the 2021/22 financial year, 24 of Nepal’s 753 local governments have yet to approve their annual budget and plan, failing to fulfill what is arguably their most critical constitutional role. As Nepal grapples with the multifaceted effects of COVID-19, there are growing concerns that these local governments may be left to fend for themselves in their response to the pandemic.
Without an approved annual budget, the 24 local governments are unable to raise the revenue needed to administer COVID-19 tests and maintain quarantine centers. On top of that, their ability to reopen schools, provide industry relief programs, deliver public health messaging, and respond to COVID-related increases in domestic violence and mental health issues is dramatically limited. A recent Human Rights Watch report said these service gaps have contributed to a number of “preventable deaths” and threaten to undo decades of progress in health, gender equality and education.
While several factors contributed to this delay in timely approvals, two stand out.
First, in Nepal, local elections, like federal and provincial elections, are contested along party lines. If the mayor’s party does not have a majority, representatives of other political parties form alliances to push for their preferred budget outcomes. If the mayor accepts the negotiations, the annual plan and budget are approved by a majority; otherwise, their approval is delayed until the mayor makes a compromise.
The greater the number of parties in the municipal assembly, the more effort and negotiation it takes to forge alliances and agreement on budgets and plans, increasing the risk of missing approval deadlines. In June 2021, the Lalitpur Metropolitan Assembly stalled for a week before being pushed by a coalition of political parties.
If the mayors and deputy mayors come from different political parties, blocking is also possible. By law, deputy mayors, 92% of whom are women, exercise considerable control and influence over the design of the budget. As such, a standoff often ensues, with both sides aiming to secure a favorable budget allocation through their two main representatives in the municipality.
Although complex, this conflict provides a unique opportunity for deputy mayors to negotiate and assert alternative plans and priority demands, which might not have been possible if the mayor and deputy mayor belonged to the same political party. Last year, the deputy mayor of the Rural Municipality of Samsi filed a lawsuit against the mayor for insufficient consultation and information on the budgeting and approval processes. The dispute between the mayor and deputy mayor resulted in a 90-day delay in budget approval.
Second, budget allocation is a complex political exercise between local ruling elites. At the ward level (the lowest unit of local government, with five elected members), budget allocations can be influenced by the political affiliations of the mayor, deputy mayor and ward presidents. At the same time, ward presidents are trying to get more budget for their constituents, regardless of their connection to the mayor’s or deputy mayor’s parties. This creates a highly competitive political environment between presidents, mayors and deputy mayors that often bypasses political affiliations.
In July 2021, in a municipality in Karnali province, a disagreement over the distribution of the budget between ward presidents (as a group) and mayors and deputy mayors (as another group) made the national news, although most of them belong to the same party. Similarly, in the province of Lumbini, in a spectacular attempt to increase their budgets, the neighborhood presidents left the municipal assembly. This delayed approval of the annual budget and plan by 13 days.
In this highly controversial environment, space for citizen engagement is limited. This space has been further reduced by the restrictions imposed to control the spread of COVID-19, which have increased the discretionary power of elected officials in the distribution of the budget.
Failure to approve budgets in the midst of a global pandemic not only jeopardizes essential care, but also shatters people’s expectations of Nepal’s federal governance system. Urgent action is needed to establish participatory systems and policies that grant less discretionary power to a few powerful locally elected representatives. This includes a strengthened local government committee, processes with a clear division of roles and functions, and more inclusive participation of members of the municipal assembly in annual planning and budgeting. Unfortunately, these reforms are unlikely to happen in time to enable an effective response to the pandemic.
This article is part of a collaborative series with The Asia Foundation. It is also part of the #COVID-19 and Asia series.