Govt to cut short budget implementation processGovernment ministries may not have to seek the permission of the National Planning Commission (NPC) before implementing projects and programmes incorporated in the budget from the next fiscal year,
Government ministries may not have to seek the permission of the National Planning Commission (NPC) before implementing projects and programmes incorporated in the budget from the next fiscal year, as the Ministry of Finance is preparing to cut short the budget implementation process to expedite capital spending.
The Financial Procedures Rule currently makes it mandatory for ministries to get approval of the NPC, the apex body that frames the country’s development plans and policies, prior to implementing central-level projects.
Because of this provision, the government failed to implement budgetary programmes from the first day of this fiscal year despite introducing the budget in Parliament one-and-a-half months prior to the commencement of the new financial year, Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara told the mid-term budget review programme on Monday.
“We will soon put an end to this practice by incorporating a provision in the Appropriation Bill that would pave the way for ministries to implement projects and programmes included in the budget without seeking permission of the NPC,” Finance Secretary Shanta Raj Subedi told the Post on the sidelines of the programme.
If such a provision is introduced, different ministries can roll out budgetary projects and programmes from the first day of the fiscal year. “We hope this will accelerate the pace of capital spending,” Subedi said.
This is not the first time the government has proposed to cut short the process of budget implementation by putting an end to the practice of forwarding programmes and projects to the NPC for approval.
Earlier, similar proposal was made when Ram Sharan Mahat was leading the Ministry of Finance. But it could not execute the plan because of the provision in the Financial Procedures Rule.
“This time we will even go to the extent of amending the Financial Procedures Act and Rule if there is need,” said Madhu Kumar Marasini, head of the Budget and Programme Division at the Finance Ministry.
The statement comes at a time when the government has been able to utilise only 17.64 percent of the total capital budget of Rs312 billion even after over seven months into this fiscal year.
Government’s capital expenditure includes spending on civil works, and purchase of land, building, furniture, vehicles, plants and machinery, among others. In a country like Nepal with huge infrastructure gap, low capital spending creates a binding constraint on economic growth, delaying the process of raising living standard of people and sharing prosperity.
To expedite capital spending, the Finance Ministry, from now onwards, will also automatically approve projects and programmes sent using Line Ministry Budgetary Information System (LMBIS), the software introduced to make budget planning process scientific and ensure funds are not allocated for various development projects in a haphazard manner.
Projects and programmes are incorporated in the LMBIS after tripartite consultation between the NPC, the Finance Ministry and the line ministry responsible for rolling out those projects and programmes.
The LMBIS, introduced over two years ago, makes it mandatory for ministries to clearly mention timeline for project implementation, time that would take to complete the project, challenges in implementation of the project, estimated cost of the project and expenditure plan over the years. Yet many ministries submit programmes in a haphazard manner, ultimately delaying project implementation.