The Minister for Provincial and Local Government Affairs Soroi Eoe says the Government is considering the review of Section 91 to 96 of the Organic Law.
This section covers the Provincial Government and Local-level Government that governs the administration of functional grants.
Other enabling legislation such as the Inter-Government Relations Financial Arrangement (IGRFA) Act are also being reviewed to remove restrictions on the use of functional grants.
Minister Eoe made this remarks following calls from the provincial governors for decentralization of powers and functions especially to lift the restrictions on functional grants which are intended for service delivery priorities specified under the IGRFA Act.
Eoe said the provincial governors demanded the removal of restrictions to be lifted so that they could use the functional grants to fund priority areas including funding of the implementation of the Medium-Term Development Plan (MTDP IV).
“These grants are placed under sectors like health, education, transport infrastructure maintenance, primary production and village court,” Minister Eoe said.
Minister Eoe said once the restriction on functional grants is lifted, provincial governments will expand according to their development priorities.
He said block grants was one of the 30 resolutions, the provincial members and governors passed in the two conferences convened last year.
He further highlighted that the National Executive Council (NEC) in its decision 190/2023 endorsed and requested powers and functions be transferred which include consideration for block grants that will allow the flexibility for provinces to divert funds to provincial priorities.
“The block grants were used in the 1977 Organic Law on Provincial Governments and were removed in the 1995 reforms.
“The main reason for the removal under the 1995 reform was because of abuse and misapplication of block grants, hence the changes to functional grants. The Marape/Rosso government is committed to ensuring this is implemented and provinces can use the funds on provincial-specific priority areas,” Minister Eoe said.
Minister Eoe further alluded that the National Government is committed to transferring more powers, functions and resources to further empower the sub-national governments to develop and grow their respective economies.
He said the role of the National Government is to make national laws and policies, set service standards and hold the sub-national governments and leaders accountable to ensure value for money, strengthening the systems and processes at the sub-national levels to ensure checks and balances.