Fiscal decentralization key to achieving the 12th Five Year Plan and the Sustainable Development Goals

Nov 7, 2017

A new report launched by the Department of Local Governance, yesterday, with the support of UNDP and UN Environment outlines the opportunities to improve the current fiscal decentralization framework.

The report was launched by Dasho Lungten Dorji, Director General of the Department of Local Governance along with Mr. Gerald Daly, Resident Coordinator/ Resident Representative for the UN in Bhutan and Dr. Dechen Tsering, Regional Director for Asia and the Pacific, UN Environment.

This assessment comes at the right time, as local governments are expected to receive significantly larger resources, 50% of the resource allocation under the upcoming 12th Five Year Plan period.

The 9 recommendations in the report speak to the Section 18 of the Constitution dedicated to the role of central government to support local governments with adequate financial resources, allocating proportion of national revenue to sub-national borrowing.

Issues covered include the resource allocation formula, linkage with the government performance management system, own source revenues at the local government level, a revenue sharing mechanism, and the capacity to plan and implement an enhanced fiscal decentralization, besides also reviewing the potential impacts of the capital grants on the pro-poor environment and climate service delivery at the local level.

Speaking at the launch, Dasho Lungten Dorji said, “We believe that the Fiscal Decentralization Report offers a unique opportunity to motivate all the stakeholders to re-examine their role in the process and to refocus on increasing democracy and good governance in our country. ”

Recognizing the importance of the recommendations, the UN Resident Representative Mr. Gerald Daly said, “We are conscious of how the Geog Development Grants are disbursed and during field trips to the East we engaged in discussions around Leaving No One Behind; the benefits of a strong economy should not leave out the vulnerable.”

Referring to UN Environment’s key expertise in helping governments plan and budget for the environment, Dr. Dechen Tsering from UN Environment said, we need to ensure that environmental sustainability and vulnerability to climate change and natural disasters are an integral part of inter-government fiscal transfer and revenue sharing mechanism. We also need to explore innovative collaborations with civil society and private sector partners in this regard.“

The Gross National Happiness Commission has encouraged the Department of Local Governance to reflect the findings of the assessment in the new Decentralization Policy of Bhutan.

The report was prepared with the support of the UNDP-UN Environment Poverty-Environment Initiative (PEI).  The programme has been working in Bhutan since 2007 to support the Royal Government of Bhutan to address the growing challenges in balancing development priorities with the need for environmental sustainability. The programme works with the Gross National Happiness Commission, the Department of Local Governance and the Ministry of Finance to integrate gender, environment, climate change, disaster risk reduction and poverty reduction in policymaking, planning and programmes. 

For more information contact:

Jigme Dorji,

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