Nepal | June 20, 2019

Budget formulation in limbo with NPC vice-chair post vacant

Himalayan News Service

Delay in appointment of vice-chairman of National Planning Commission (NPC) — the apex planning body of the government — has hampered the groundwork for budget formulation of the federal government.

The federal government must submit the budget of next fiscal by May 29, as per the provision of the Constitution. However, groundwork for formulation of budget for next fiscal has not gathered pace as the resource committee has been unable to hold its meeting in the absence of the vice-chairman at NPC.

Vice-chairman of the NPC leads the resource committee, which determines the size of budget for next fiscal based on the assessment of available resources — revenue, domestic debt, foreign aid and cash surplus of current fiscal.

After the resource committee determines the tentative size of the budget, the NPC gives the budget ceiling to the ministries, according to which the latter have to submit their budget.

It is reported that the federal government is preparing to unveil a budget of Rs 1,570 billion for next fiscal. However, the grant amount to the lower layers of administration is yet to be finalised.

Secretary of the National Natural Resources and Fiscal Commission (NNRFC), Baikuntha Aryal informed that the commission will determine the grant requirement of the lower layers of administration by mid-March.

The resource committee, led by NPC vice-chairman, comprises one member of the NPC who looks into budget and fiscal management, Nepal Rastra Bank governor, finance secretary, financial comptroller general, secretary of the NPC and joint secretary of the fiscal management division of NPC as member secretary.

As the federal ministries are going to hand over certain projects that can be implemented from the provincial and local levels, it is necessary for the NPC to identify the resource need of the federal ministries to implement the central level projects.

According to Khom Raj Koirala, joint secretary of the NPC, the federal ministries have submitted the programmes under their respective ministries that are going to be implemented from the federal ministries, provinces and local levels.

“As reported by the federal ministries, NPC has segregated the programmes that will be implemented at the federal, provincial and local levels,” according to Koirala. “Following the appointment of NPC vice-chairman, the commission will provide the budget ceiling to the federal ministries for next fiscal.”

The provincial governments have to present their budget to the provincial assembly (Parliament) by mid-June or a month before of the new fiscal year begins. Likewise, the local governments have to submit their budget to the budget assembly 20 days ahead of the fiscal year calendar.


Various stages of budget formulation

• By November 27: Ministries submit programmes/projects for next three years to NPC, segregating which layer of administration would be responsible to implement them

• December 11: Cost estimation and prioritisation of the projects begin

• December 30: Medium-term expenditure framework (MTEF) is developed and ministries (central government) can enter their programmes/projects into Line Ministry Budget Information System (LMBIS)

• First week of March: Ceiling given to the ministries

• March 8 to 29: Programmes/projects and their procurement plans proposed by the ministries finalised through tripartite negotiation among individual ministry, NPC and MoF

• Mid-March: NNRFC submits the tentative figure of grant transfer (equalisation and conditional) to lower layers of administration

• May 4: MoF finalises the budget

• May 29: Budget for fiscal 2018-19 presented to the Parliament


A version of this article appears in print on March 06, 2018 of The Himalayan Times.


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