After elected local governments were established, the fund’s relevance was called into question.
The administration is dismantling the Poverty Alleviation Fund, which was established in 2003 to implement anti-poverty policies at the local level during the conflict period, nearly three years after agreeing to remove it.
In November 2018, the Cabinet decided to abolish the fund because local administrations had been elected. However, it has been permitted to operate without being assigned any tasks, and the government’s resources have been spent on administrative costs, including personnel wages, for nearly three years.
The fund would be eliminated once more in the fiscal year 2021-22, according to the budget.
“On Friday, we received a letter from the Finance Ministry requesting information on our bank accounts and assets, including automobiles, by mid-October,” said Nirmal Kumar Bhattarai, the fund’s vice-chairperson. “According to the letter received through the Prime Minister’s Office, the Prime Minister’s Office will move on with the process of repealing the Poverty Alleviation Fund Act.”
Because the fund was established under the Act, the Act must be repealed in order to end the fund’s legal existence. The government may need to take the proposal to repeal the law to Parliament after the Supreme Court ordered the House of Representatives to be reinstated on Monday.
According to Bhattarai, the Finance Ministry’s letter also requested that the fund prolong employee contracts until mid-October, or until the fund’s complete accounts are turned over to the ministry.
The office has been handled by a dozen people, largely juniors, for the past three years.
“We’ve also been instructed to update the revolving fund accounts and shut some of the accounts that aren’t in use right now,” Bhattarai said.
The fund generated over 32,000 revolving funds to be maintained by local communities in order to execute anti-poverty programs. These monies are being used to provide credit to persons in the community who are looking for ways to make money.
The revolving funds have a total of Rs19 billion in assets. The government contributed Rs15 billion, the majority of which came in the form of World Bank grants, while local communities around the country contributed Rs4 billion.
When the government announced the fund’s demise in November 2018, it also named Bhattarai as vice-chair, with the task of clearing arrears and planning an exit strategy.
Bhattarai claims to have already presented his exit strategy.
However, during the board meeting on April 7, 2019, the Prime Minister insisted on the PAF’s continuation, according to Bhattarai.
In the current fiscal year, the government has allotted Rs150 million to the fund. The fund was designed to assist local governments in forming 600 cooperatives with users of the country’s more than 32,000 revolving funds, which provide loans for income-generating businesses.
However, it was unable to make any decisions regarding the use of Rs150 million because some board member posts remained unfilled. While the Poverty Alleviation Act of 2006 called for a nine-member board, there are currently just four members on the board, including the Prime Minister, who serves as chairwoman. The other members have not been appointed by the government.
The unused budget was subsequently redistributed to other ministries by the Finance Ministry.
“During the current fiscal year, the fund had no work,” Bhattarai stated.
Officials and academics say the fund is no longer needed because local administrations are in place to focus on poverty reduction on the ground.
In fact, they argue that continuing the fund would be in violation of the fund’s Guidelines for Community Organizations and Small Infrastructure Development Programs.
Local governments are responsible for keeping records of community organizations and small infrastructure projects, facilitating community organizations to continue anti-poverty initiatives, and monitoring the operation of revolving funds established at the community level,integrating community organizations in local government policymaking and transaction monitoring, and developing skills development programs according to the guidelines approved by the fund’s board on April 7, 2019.
Bidyadhar Mallik, a former minister and finance secretary, stated the fund was no longer necessary after the emergence of elected local councils.
He suggested that the federal government create a unit to give technical assistance and advisory services to local governments in order to help them implement poverty-reduction programs. “If the fund is maintained, it can fulfill this job; nevertheless, its existence should not be prolonged without any accountability, as the government’s resources are being squandered.”
According to the constitution, poverty reduction falls under the concurrent jurisdictions of the federal, provincial, and municipal governments.
Mallik, on the other hand, believes that the revolving fund should be run by local communities because it is a community-driven initiative that empowers local residents.
He believes that local governments should be active in the monitoring of their projects.
The country was in war when it was founded in 2003, and government agencies were unable to mobilize in rural areas. As a result, the fund was founded to operate anti-poverty programs through community mobilization.
“Another goal of the program was to win people’s hearts and minds to prevent the influence of the then rebels, the Maoists,” said Mallik, who was also involved in the fund.
However, according to the World Bank, its performance remained uneven. In a 2017 evaluation, the World Bank deemed the results of the fund’s programs, as well as the government’s performance, to be satisfactory. However, the fund has been involved in a number of scandals.
In March 2015 and April 2016, the Commission for the Investigation of Abuse of Authority filed two corruption proceedings in the Special Court against 50 top executives and staff members of the fund. The Special Court convicted nine Poverty Alleviation Fund personnel of corruption in September 2018, including then-executive director Raj Babu Shrestha.
In 2019, the National Vigilance Centre, a corruption monitor under the Prime Minister’s Office, discovered various abnormalities in the fund during an investigation.
The centre discovered suspected anomalies of Rs185.96 million under the fund’s Infrastructure Sub Project and Income Generation Programme, according to a report seen by the Post. The center also discovered missing equipment worth Rs41.47 million from its Kathmandu office.
Source – The Kathmandu Post
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