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Lyonpo Namgay Tshering
Lyonpo Namgay Tshering

NC questions LGs capacity to wrestle with block grant

While the local government for the first time is allotted with 50 percent of the Plan budget, the National Council questioned the local government’s capacity to administer, execute, and monitor development works in the 12th Plan.

In the 12th Plan, both the central and local governments are allocated with Nu 50B each. However, for the local government, funds would be disbursed in form of block grants.

Block grant is the money allocated by the central government to a local government with only general provisions as to the way it is to be spent, in contrast to a categorical grant, which has stricter and specific spending provisions.

The current norm has local government officials travelling to Thimphu to discuss and negotiate budget with the finance ministry. Block grant would give the prerogative to the local government as to where and how to pump the fund.

Even during the finalisation of draft 12th Plan, the former government highlighted that dzongdags would be the main drivers for the successful implementation of planned activities. It was also pointed out that ensuring adequate technical competence, institutional capacity, and financial system at the local level would be crucial.

During the presentation of the 12th Plan to the Council, the finance minister was questioned on the level of preparedness at the local level to handle huge budget and fixing accountability.

The Haa council representative, Ugyen Namgay said that the government must first build the competency of local government officials and then release the budget. He also pointed to the annual audit reports where a majority of irregularities pertains to the local government.

He said that most gewogs do not have adequate human resource. In Sombaykha, he said the dungkhag is also not adequately staffed. Without an accountant, he said it would be difficult for the gewogs to monitor Plan works.

The Gasa Council representative, Dorji Khandu, suggested recruiting one engineer and an accountant in every gewog. For dzongkhags like Gasa, it takes days to reach from one gewog to another.  “It would take about 18 days for officials to go to Lunana and come back,” he said, pointing out that if the gewogs were not adequately staffed, monitoring would be challenging.

Doing so, he said, came with an opportunity to create employment opportunities and to reduce the unemployment rate.

Finance Minister Namgay Tshering said that allocating 50 percent of the budget to the local government was in keeping with principles of Wangtse Chirphel.

Decentralisation of financial powers, he said, was limited in the last two plans the main reason being the capacity of the local government.

“If we further delay doubting the capacity of the local government, we will never be able to strengthen the capacity of the LG,” he said.

With regard to accountability and responsibility, Lyonpo Namgay Tshering said the finance ministry and the Gross National Happiness Commission had come up with guidelines, rules and regulations. This, he said, would set the rules clear as to how the local government should formulate plans and spend the budget.

The existing financial rules and regulation, he said, would make things more transparent in terms of fund utilisation.

However, the finance minister said block grant would not be implemented in the current fiscal year, which is already six months behind.

The implementation of block grant, he said, would begin in the fiscal year 2019-20. Within this time, he said the government would focus on the capacity development of the local government.

Moreover, he said the capital budget in the 12th Plan was only 20 percent of the total outlay, which was not so enormous. “It is not a question of whether planned activities could be achieved or not but a question of fund availability,” he said.

On requirement of engineers and accountant in every gewog, Lyonpo said that it is not a necessity. People could be recruited on contract based on project. “Not every gewog is like Lunana. Many gewogs are closer to towns and connected with roads.” However, if need be, he said engineers and accountants could be recruited based on the need and project size.

Tshering Dorji

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