Downturn in economy resulting in decrease of functional grants, says Abel

THE downturn in the economy has resulted in a decrease in functional grants to districts and provinces from K578 million to K565 million, says Deputy Prime Minister and Treasurer Charles Abel.
Tabling the National Economic and Fiscal Commission annual reports for 2015 and 2016 in Parliament, Abel said the commission had been working with the Department of Provincial and Local Level Government Affairs to implement district development authorities.
He said the commission had provided a high quality and evidence-based advice to the government on the funding for provinces and districts.
“This led to the adoption of a new intergovernmental financing system. It now takes into account the costs of delivering services in each province as well as all the revenues available.
“Those provinces that need more get more and those that need less get less and provinces are encouraged to deliver basic services not only using functional grant but also their own internal revenue,” Abel said.
He said provinces were for the first time receiving funding based on how much they needed.
Over the past seven years, provinces such as Chimbu, West Sepik, Central and Milne Bay received a significant increase in their functional grants.
In 2009, some provinces were receiving only one third of the funding that the NEFC estimated they needed to deliver services.