GOVERNMENT BUDGET

FORMULATION AND IMPLEMENTATION Babu Ram Subedi

PROCESS IN NEPAL Under Secretary, GoN
BUDGET?
Expenditure plan of an organization or a person
(Traditionally, estimates of revenue and expenditure)
Future orientation
Defined objective
Pinpointed in monetary terms
The Major objective of the government budget is to maximize “ public interest”
(of the people at large)
A major tool of fiscal policy
MAJOR GUIDELINES FOR
BUDGET FORMULATION
The Constitution of Nepal guides the budgetary process ( Part 10):
Finance Minister shall present the estimate of the revenue and expenditure for
every fiscal year before the joint meeting of the houses(parliament) (Article 119):
-Estimates of Revenue
-Expenditure (Non –votable amounts): above consolidated fund
-Expenditures from consolidated fund
-Progress of the past year
Date fixed for budget presentation (Jestha 15)
BUDGET FORMULATION
PROCESS
(TOP-DOWN PROCESS)
Major responsibility of budget formulation rests on Ministry of Finance(FPA,1999)p
Budget and Resource Committee at NPC set the following:
-Macroeconomic Framework
-Medium Term Expenditure Framework
-Size of the budget
Ministry of Finance set the budget ceiling
Budget ceiling is circulated to the ministries, ministries to departments and departments to spending
units
Budget Formulation Guidelines 2072 has set the formulation calendar(Start from November)
BUDGET TYPES
Capital budget: generating capital goods e.g. construction of dams, roads &
equipments
Recurrent Budget: generally the administrative costs and costs on soft programs
e.g. health service extension , educational and others
Financing: share and loan provided to PEs, Principal and interest paid by the
government (Nepal)
 BUDGET FORMULATION
PROCESS...
Institution (BOTTOM-UP PROCESS)
Role

Parliament Approves the budget

Ministry of Finance Consolidates the budget

National Planning Commission Tripartite negotiation(Ministries, NPC and

Ministry of Finance)

Ministries Ministry level consolidation and refinement

Departments Compile and refine

Spending Units Prepare the programs and budget

BUDGET IMPLEMENTATION
PROCESS
Once the Parliament approves the budget, Ministry of Finance Provides
"Authorization " for spending to the "Secretaries" of the Ministries
Secretaries provide authorization letters to the "Department Heads"
Department Heads provide authorizations to "Spending Unit Chiefs"
Spending Units spend money based on the approved programs
 Revenue is collected by tax offices and other authorities
BUDGET IMPLEMENTATION:
BUDGET RELEASE PROCESS
Spending Units spend the money and submit Payment Requests to the District
Treasury Offices(DTCOs)
DTCOs verifies and entered the transactions into the TSA (Treasury Single
Accounts) System (which is online/web-based central system)
DTCOs issue the Cheques against the payment requests and handover to the SUs
Spending Units pays cheques to the concerned parties/vendors
BUDGET REVIEW AND AUDIT
PROCESS
Review Process:
 Budget review is made by Development Action Committees(trimester basis)
-National Development Action Committee: Chaired by the Prime Minister
-Ministry Level Development Action Committee: chaired by Ministers
Ministry of Finance conducts Mid-term review
Sometimes Parliamentary Committees conducts review/query budget
implementation
BUDGET REVIEW AND AUDIT
PROCESS…..
Audit Process:
DTO conduct "internal audit" on behalf of Financial Comptroller General Office
 The Auditor General conducts final/statutory audit of government transactions
Public Accounts Committee of Parliament review the Report of the Auditor General
STRENGTHS OF NEPALESE
BUDGETARY PROCESS
Multi-year forecasts (MTEF, 3 Years forecast practices)
Budget Formulation Guidelines (2015) and implementation Guidelines
Budget Calendar
Spending based on the approved program
Online submission of budget by ministries to the MOF
Web- based Budget release system : the TSA system
Annual Statutory audit
WEAKNESSES
Line item budget : weak focus on "Program Budgeting"
Low level of revenue base (17 percent of GDP)
Weak productivity(especially of Capital budget, as well recurrent)
Calendars generally violated: eleventh hour workout
Weak internal control system
Performance audit is lacking
Parliamentary control (in practice) weak and sometimes biased
THE WAY FORWARDS
Perspective budgeting( Medium-Term Budgetary Framework)
Focus on: productivity and 'programs'
Gear up capital budget (size and implementation)
Enhance 'implementation capability', 'internal control system' and 'M&E'
Performance audit
Strengthen parliamentary control
Follow the Calendar
YOUR QUESTIONS ?
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THANK YOU VERY .
MUCH