Government replicates performace based grant system

April 2008; The Government of Nepal (GoN) has decided to replicate the performance based grant system in all 75 District Development Committees linking the results of the performance assessment with its own development grant.

The district's performances will be evaluated annually based on Minimum Conditions (MCs) and Performance Measure (PMs) indicators.The MC/PM assessment manual was approved by the Ministry of Local Development on
17 April.

Started by the United Nations Capital Development Fund (UNCDF) and Department for International Development (DFID) in 2004/2005 in 20 programme districts, these Minimum Conditions are the minimum safeguards for proper utilization of public resources, identifying the basic absorption capacity and maintaining financial discipline. Performance Measures are designed to create incentives for Local Governments to improve their performance.

Based on the assessment results, the UNCDF/Decentralised Financing and Development Programme (DFDP) was providing approximately US$ 100,000 capital development grant per district/ year. With financial and technical support by DFDP , the Local Body Fiscal Commission (LBFC) will be conducting the national Minimum Conditions and Performance Measure assessment by mid June and the results of this assessment will have an effect on the part of the GoN unconditional capital development grant allocated to DDCs for the fiscal year 2008/09.