The dominance of central
transfers and low capacity to generate revenues at the local level are two key
challenges to South Asia with regard to local finances, according to World
Bank’s country director for Nepal and Bangladesh Ellen Goldstein.
Though global experiences
demonstrate that local governments are best placed to provide services
according to local needs and preferences, in South Asia, local fiscal and
financial capacity need to keep pace with the increasing responsibilities, she
said, addressing a cross country learning forum 'Strengthening Local Government
Finances for Better Service Delivery and Greater Accountability', organised
jointly by the Swiss Development Cooperation (SDC) and World Bank (WB) here today.
"To exercise autonomy, local
governments need to generate their own revenues through taxes, fees, user
charges, and other forms of cost recovery and borrowings," she added.
"There should be clearly
defined functional responsibilities, and funded and fiscal transfers should be
received in adequate amounts and on time," she said, adding that local
governments need to mobilise new resources and increase their capacity to borrow
responsibly for investments in local services. "Finally, local governments
need to seek ways to attract private participation to finance and deliver local
public services."
The three-day forum brings
together over 80 policy makers and local finance practitioners from central,
state and local governments from various Asian nations. It aims to provide
participants a platform to share experiences in reform processes at the local,
state and federal levels with regard to local finances, and good practices and
instruments.
Goldstein also highlighted the
World Bank’s support for local governance programmes across the South Asian
region.
In Bangladesh, the Local
Governance Support Project supports 4,501 rural local governments, whereas in
Pakistan, the Punjab Municipal Services Project supports 135 small local
governments.
Similarly, in Afghanistan, policy
analysis is helping shape the sub-national system and enhance decentralisation,
and in Nepal, the 'Emerging Towns Project' supports intergovernmental
frameworks and strengthening infrastructure and services in small and medium
sized municipalities.
In India, the recently approved
Local Governance and Service Delivery Projects in West Bengal and Kerala reach
to about 2,000 small local governments.
"However, inter-governmental
fiscal frameworks need reforms," Goldstein added.
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