Public finance management (PFM) is a pillar of effective governance and central to citizens’ ability to hold the government accountable. It is, therefore, a key priority for governments committed to democratic reforms and development. Globally, budget systems have moved away from the traditional closed budget system, which has been both inadequate and inaccessible to users, towards an open budget and participatory approach based on transparency, participation and accountability.

Civil society organisation (CSO) in Nepal has been able to play an active role in steering public finance management. However, they have not been active and vocal in budget formation and implementation.

Citizen engagement in public finance management is to mobilise the efforts made by people at the grassroots level and channel their limited resources responsibly. Conventional wisdom has it that there is no free lunch, and everyone must, by necessity, play their part ineffective governance through the participation of two-directional horizontal and vertical links between government, civil society organisations, academia and the private sector.

Citizens’ engagement in the budget process in Nepal is facing many challenges emanating from the chaotic politics and power-play, divided authority at different levels of governance, lack of transparency and accountability, absence of capacity, limited information and inadequate efforts to promote citizen’s participation. All these problems are interrelated.

There is a compelling case for citizen engagement in public finance management in Nepal. Citizens should have the chance to act responsibly as taxpayers, consumers of public services, investors, and advisors to political leaders on managing the state’s fiscal resources.

The age of democratic accountability in Nepal also needs to emphasise citizen engagement. A budget system is a tool of surveillance and control of public expenditure by the public. It enables citizens to monitor how their taxes are being spent by the government and ensures that they contribute to the decision-making process through active participation, thus increasing transparency. But this cannot be attained unless there is an intense form of citizen engagement in budget management at all tiers of government institutions.

In the context of three tiers of government, citizens typically demand efficient, accessible and low-cost public services and development. They also increasingly demand accountability from the government in terms of policy formulation and implementation, accountability for results on various issues such as environment, health, education, infrastructure etc., and improved and inclusive democratic governance processes. There is little information and data available to the general public about these issues related to the plan and programme. Likewise; Citizens lack the skills to analyse the budget or how the national budget is spent.

In the absence of national strategy on public participation in the PFM process, fragmented movement amongst the people and lack of civic space is hampering the process of budget formulation, implementation and oversight in Nepal. So, we have to think about how we can create the opportunity for more citizen participation in the PFM cycle, which is needed to promote transparency, accountability, effectiveness and efficiency of public finance management in all three levels of government in Nepal.

A national strategy to promote citizen engagement in public finance management is vital and urgent for Nepal. A citizen engagement in public finance management is the process of citizens exercising their legal right to participate in government decision-making processes, thereby improving information transparency and ensuring that decisions are taken democratically.

Overhauling the public expenditure management system is an important measure to promote good governance and better delivery of public services. There is a need to consolidate the growth of citizen participation in the budget cycle at central, provincial and local levels through appropriate information technology-based mechanisms. “e-Budget” and “e-Procurement” have emerged as two best practices around the world which could be replicated in Nepal.

A national strategy to promote citizen engagement in the budget cycle, formulation, policy design, implementation and oversight may support achieving the country’s goals and priorities. Political leaders and public finance mechanisms and institutions at all levels must recognise the significant role that citizen participation plays in addressing the problem and concerns of grassroots and marginalised citizens. Community involvement in the budget process is essential if there is greater equity in service delivery.

The modern idea of the budget is “open budget”, which means a more participatory budget and democratic governance. It also helps reduce corruption and promote financial discipline. And to maximise the benefits of an open budget, it needs to be presented in a way that is accessible to citizens, clear and compelling for them to understand to use the information in their decision-making. This demands that budgets be prepared and published to reflect the priorities of people and civil society.

An open budget is one in which the information, data and knowledge associated with the budget process are accessible for public scrutiny. There is a need to open up/distribute the information and data timely to know how the budget-making, so that all citizens can view it, comment on it and shape it as they wish. There is an urgent need to increase the transparency of the budget at all levels of government. Government should provide a detailed analysis of their revenue and expenditure in citizenry format. The constitution of Nepal has stated that every citizen shall have the right to information as a fundamental right.

Civil society organisations have also need to actively engage with creative innovation of partnership in monitoring public finance management. However, there remains a solid need to direct their efforts to participate more closely in formulating the budget and implementation cycle. The civil society organisations also need to engage in the oversight process with the leading auditor institution and parliamentary public account committee as a citizen auditor.

There is a process of citizen participation in performance audit (CPA), through which citizens play an active role in the monitoring and evaluating the progress of public sector entities, including the government organisations, public sector enterprises and non-depository autonomous bodies on behalf of the citizens. Citizen participation in auditing and follow up of the auditor’s recommendations has been gaining momentum in Nepal with the office of the auditor general and civil society partnership.

There is a significant shift underway around the world in public finance management. As sources of revenue, diversify and fiscal spending extends to many programmes that have long been managed—if at all—by other actors, government capacity is being strained to provide adequate oversight and meet growing demands for information on expenditure and performance.

Transparency in the public sector has been fraught with difficulties due to the citizens’ inadequate understanding of the problems and issues at hand. Governments need to provide more information and create innovative partnership approach relating to fiscal matters. Citizens have a right to know what their governments are doing and access such information. They have the right to participate in the public policy formulation process. The primary purpose of fiscal transparency is accountability from which both accountability and citizen participation can be derived in the public finance management system.