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LGSDP Program Description
 
The LGSDP has been designed to optimally channel multi-donor support to strengthen good governance and promote inclusive green socio-economic development at the local level. Currently the LGSDP is being supported by the EU through Capacity Development for Local Government and Fiscal Decentralization in Bhutan. It aligns with the 11th FYP which had a development theme of ‘self-reliance and inclusive green socio-economic development’ with the thrust on inclusive social development and Green Accelerated Economic Development and similarly with the current 12th FYP (2018-2023) focusing on “Just, Harmonious, and Sustainable Society through Enhanced Decentralization”. 
 
The program has three major outcomes or ‘components’: (a) equitable socio-economic development at local level; (b) conservation and sustainable use of environment at local level; and (c) strengthening good governance at the local level.
 
The first outcome focuses on: strengthening the system of fiscal decentralization, including Annual Capital Grants, Performance-based Grants and Capacity Development Grants, for equitable local socio-economic development.
 
The second outcome focuses on: institutionalizing responsibility and knowledge for mainstreaming gender, environment, climate, disaster, and poverty (GECDP) issues in Local Governments; monitoring, advocacy and training to enhance the effectiveness and sustainability of GECDP mainstreaming; promoting best sustainable practices and integrated local area-based planning; and fostering enabling conditions for green development at the local level.
 
The third outcome focuses on: improving the utilization of integrated National Monitoring and Evaluation System (NMES) by Local Governments; strengthening access to demand-driven capacity development for Local Governments; implementation of the RGoB-approved ‘Capacity Development Strategy for Local Governance’; and enhancing public participation, transparency, and accountability of Local Governments.
 
Outline of Ongoing Budget Support Operation
 
The EU is supporting the LG sector by contributing, along with other development partners who were supporting RGoB through LGSDP, which was part of the 11th FYP.  As part of the EU Multi-annual Indicative Programme (MIP 2014-2020) for support to fiscal decentralization and capacity development for Local Governments with the aim of empowering local authorities through an improved functioning of the Local Governments’ rollout of performance based grants with focus on climate change adaptation, a revised and fully implemented capacity development strategy for local governance, an improved public participation, transparency and accountability of Local Governments and finally a better mainstreaming of gender, environment, climate change, disaster and poverty (GECDP) into local development planning. 
 
The Financing Agreement (FA) for CDfLGFD provides support for Local Government reforms as a Sector Reform Contract (SRC). This support is closely linked to LGSDP. It included complimentary technical assistance and studies, and strengthening Public Financial Management (PFM) by indirect management with the World Bank.
 
LGSDP Strategic Framework
 
Building on the strategic focus of the 11th FYP, the development objective of the Program is: to contribute to the 11th FYP goals of self-reliant, inclusive green socio-economic development and good governance at the local level and also contribute to 12th FYP which is aimed at “Just, Harmonious and Sustainable Society through enhanced Decentralization”.
 
The immediate objectives are:
 
(a) To promote sustainable and equitable socio-economic development at the local level;
(b) To promote conservation and sustainable management of the environment at the local level; and
(c) To strengthen good governance at the local level.
 
The above immediate objectives translate to the following outcomes:
 
(a) Equitable socio-economic development sustained at the local level;
(b) Environment conserved and sustainably utilized at the local level; and
(c) Good governance strengthened at the local level.
 
While the LGSDP’s outcomes and strategic emphases are either taken directly from, or reinforce, the 11th FYP and the current 12th FYP, they adopt a local governance perspective in relation to the attainment of those outcomes and the Plan’s overall national development goal, and are designed in a manner to ensure mutually strengthening activities across the three main outcomes supported by the Program.
 
However, the LGSDP is not designed to, nor it can, achieve the aforesaid outcomes on its own. The LGSDP resources constitute only a fraction of the total budget outlay. It is important to recognize that many programs and projects will be taking place in order to attain the outcomes, and LGSDP will be just one of them but an important one. It will give impetus to those critical aspects, emanating from the experiences and lessons of similar projects implemented earlier, which will add value and meaningfully contribute to the overall work of RGoB, based on the current 12th FYP. 
 
Under each LGSDP outcome, the following outputs are expected:

 Outcome | Output
1. Equitable socio-economic development sustained at the local level  | 1.1 Overall system for fiscal decentralization and ACG strengthened; 
  | 1.2 Performance-Based Grant Mechanism focusing on GECPD mainstreaming, Good Governance and Accountability rolled out;
  | 1.3 Intra- and inter-governmental coordination for fiscal decentralization and LG finance improved; 
  | 1.4 System and procedures for LG own source revenue mobilization reviewed. 
2. Environment  conserved and sustainably utilized at the local level | 2.1 Responsibility and knowledge of mainstreaming GECDP issues institutionalized in local governments; 
  | 2.2 Momentum and innovation of GECDP mainstreaming initiatives in Bhutan maintained; 
  | 2.3 Local Government elected and civil service officials trained in the implementation of best sustainable practices and integrated local area-based planning; 
  | 2.4 Green economic development fostered at the local level.
3. Good governance strengthened at the local level  | 3.1 Improved utilization of the integrated National M&E System by local governments; 
  | 3.2 Strengthened access to demand-driven capacity development available for the LGs; 
  | 3.3 The Capacity Development Strategy for Local Governance implemented; 
  | 3.4 Public participation, transparency and accountability of the local governments implemented. 
 

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