Nepal | July 07, 2020

Govt backtracks on earlier decision

Rupak D Sharma
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Capital spending unlikely to go up as plan to cut short budgetary programme approval process has been rolled back

Kathmandu, July 28

Capital spending probably will not go up in a desired manner in the current fiscal year as well, as a previous decision to cut short annual development programme approval process is unlikely to be implemented this year.

A day after the budget of fiscal year 2015-16 was presented at Parliament on July 14, Finance Minister Ram Sharan Mahat had said ministries need not seek approval of the National Planning Commission (NPC), the apex body that frames the country’s development plans, to implement annual programmes.

This provision was introduced so that ministries do not have to make rounds of NPC for weeks before rolling out development projects incorporated in the annual budget. This practice, according to Mahat, would save time, expedite project implementation and ramp up capital spending.

But the spirit shown by the finance minister to give a boost to capital spending was not reflected in letters dispatched by the Ministry of Finance (MoF) to other ministries on July 17.

The content of these letters — which extended authority to ministries to start spending funds allocated through the budget — was no different than that of the past, as it said programmes have to be approved by the NPC.

As a result, ministries have once again started forwarding programmes to the NPC for approval.

This is expected to delay project implementation this fiscal as well because the NPC has only been able to endorse programmes of Ministry of Physical Infrastructure and Transport so far.

“What is even worse is that MoF has said all annual programmes of all ministries have to be endorsed by NPC,” at least two senior NPC officials told The Himalayan Times on condition of anonymity. Many NPC officials have called this a ‘regressive move’, as no programme, other than those categorised as Priority One, required NPC’s approval in the past.

Such changes introduced in the fiscal year declared by the government as ‘Budget Implementation Year’ have surprised many senior NPC officials.

The MoF, on the other hand, does not want to take the blame for what has happened.

“Programme approval is the domain of the NPC. So, NPC should call the shots and frame a guideline accordingly,” said Finance Secretary Suman Prasad Sharma.

But NPC officials do not want to buy these arguments.

“It appears the MoF is trying to shirk responsibility. If it was serious about the issue, it should have clearly mentioned that ministries need not get NPC’s approval in the spending authorisation letters,” they said.

Earlier, the MoF and the NPC had decided to skip the process of getting NPC’s endorsements, as they had agreed to hold tripartite meetings — between officials of NPC, MoF and concerned ministry — while finalising budget programmes.

Based on this understanding, tripartite meetings were held towards the end of last fiscal year.

This means the NPC was well aware of programmes of all the ministries prior to the launch of the budget.

“Since we had already gone through programme proposals in the past, we actually did not think it was necessary to go through them again. But now we have to. And this duplication will only affect project implementation,” NPC officials said.

However, it is also not that the NPC has done all it could to expedite project implementation and raise capital spending.

Earlier, the NPC had decided to stop preparing Annual Development Programme Volume 2 — also referred to as Budget Part 2 — which allocates budget for district-level projects and programmes.

Based on this decision, districts were allowed to allocate funds for projects and finalise them on their own.

This practice of decentralising budget preparation and finalisation process was expected to increase participation of locals in the planning process and help the districts identify demand-based projects.

This purpose may have been met. Yet, there is uncertainty on timely implementation of these programmes and projects, as the NPC has now said different ministries should forward Annual Development Programme Volume 2 to its secretariat for approval.

“These documents would then be forwarded to Parliament for approval,” an NPC official said, adding, “We don’t know how long lawmakers will take to endorse these documents and when these projects would be implemented.”

A version of this article appears in print on July 29, 2015 of The Himalayan Times.

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