Nepal | July 04, 2020

Budget transparency: A must to achieve goals

Dutta Shree Duwadi (Khanal)
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Budget monitoring is a continuous process by which we ensure action plan is achieved  in terms of expenditure and income. Regular monitoring also ensures that resources are used for their planned purposes and are properly accounted for

Illustration: Ratna Sagar Shrestha/THT

The federal budget announced on May 29 has drawn flak from some key stakeholders, including economists and private sectors. Although the financial outlay for the fiscal year 2018-19 has in general been described as realistic and balanced, some private sector players have commented that the government’s financial plan might not facilitate entrepreneurship and investment.

Nonetheless, the budget does give a glimmer of hope when it comes to maintaining fiscal discipline. Increase in tax on tobacco, vehicles and alcoholic beverages and revisiting the income tax slab might not be enough to address the resource gap, as the key concern is how the country can minimise the lapses in revenue collection.

Needless to say, the budget this time has focused on many implementation sides and has talked about implementation of much-needed programmes.

For instance, in case of development projects, Financial Comptroller General Office (FCGO) will release the payments to contractors after handing over development projects to encourage contractors for the speedy works.

For implementation side, the government must engage citizens and civil society for the consultation of their need and budgetary demands.

An important limitation of civil society intervention through participatory budgeting is that it often depends on a weak legislature, or undermines the power of the legislature. Accountability and transparency are one of the mediums for good governance. Opening up of the budget process to citizens and greater legislative oversight are important steps in improving government accountability.

The federal budget needs to be timely revisited and monitored by the government. Regular monitoring of the budget by the concerned ministries could help in the proper mobilisation of large chunks of money for development both at the central and local levels.

There are various mechanisms for budget monitoring.

In the budget, it is mentioned that the current government is preparing to set up a high-level monitoring mechanism under the prime minister and that ministry level monitoring mechanisms would regularly report to the high-level monitoring mechanism.

A budget, in reality, must check where the money is coming from and where it is going. Budget allocation and distribution, along with the post-budget audit mechanism to federal, provincial and local governments, is the key to achieving the set targets.

In the budget, legal frameworks have been prepared and Public Procurement Rules have been issued to find out the loopholes that have often been exploited by contractors for their benefits. The government must monitor the progress of national pride projects, construction of which need to be intensified. The National Planning Commission should also monitor the projects.

The monitoring mechanism will create an environment for coordination among various stakeholders and government agencies to expedite the development works. Monitoring mechanism in the budget can be an input tool for the budget decision making through careful planning and implementation.

Monitoring and evaluation results can be fed into budget decision-making.

Budget monitoring is a continuous process by which we ensure action plans are achieved – in terms of expenditure and income. Budget monitoring ensures that resources are used for their planned purposes and are properly accounted for. This also helps in identifying potential opportunities and/or problems and taking corrective actions.

The frequency of budget monitoring depends on the structural set-up of an economy.

Budget monitoring could make the authorities accountable for people, look for timely completion of the development projects and control leakages in revenue collection. By means of e-governance, frameworks can be developed for management of payables and arrears.

Budget monitoring also involves budgetary control system. The components of the control system are corporate vision (achievable targets), accountability, user-friendly tools, compliance culture, budget variation risk management system, predictability and effective audit system.

Fiscal discipline at the provincial and local levels is extremely important for the country to achieve the economic goals. But it is likely that local and provincial leaders will be increasing expenditure for personal benefits and for the benefit of their parties. Therefore, there is a need to develop a high-level monitoring mechanism to look after the central, provincial and local governments’ attempts for utilising the country’s financial resources. Effective use of banking system could be one of the important aspects to monitor the utilisation of the government budget at the grassroots level.

Budget transparency leads to less corruption. It allows citizens to give feedback on adequacy and quality of services and infrastructure provided. It could also generate a higher level of revenues.

Database management at ministries, departments and other government agencies could also help strengthen accountability in relationships of public spending and revenue collection.

Duwadi is a freelance consultant


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