1. Government Budget Formulation and Implementation Process in Nepal
Babu Ram Subedi
Under Secretary, GoN

2. Budget? Expenditure plan of an organization or a person
(Traditionally, estimates of revenue and expenditure)
Future orientation
Defined objective
Pinpointed in monetary terms
The Major objective of the government budget is to maximize “ public interest” (of the people at large)
A major tool of fiscal policy

3. Major guidelines for budget formulation
The Constitution of Nepal guides the budgetary process ( Part 10):
Finance Minister shall present the estimate of the revenue and expenditure for every fiscal year before the joint meeting of the houses(parliament) (Article 119):
-Estimates of Revenue
-Expenditure (Non –votable amounts): above consolidated fund
-Expenditures from consolidated fund
-Progress of the past year
Date fixed for budget presentation (Jestha 15)

4. Budget Formulation Process (top-down process)
Major responsibility of budget formulation rests on Ministry of Finance(FPA,1999)p
Budget and Resource Committee at NPC set the following:
-Macroeconomic Framework
-Medium Term Expenditure Framework
-Size of the budget
Ministry of Finance set the budget ceiling
Budget ceiling is circulated to the ministries, ministries to departments and departments to spending units
Budget Formulation Guidelines 2072 has set the formulation calendar(Start from November)

5. budget Types
Capital budget: generating capital goods e.g. construction of dams, roads & equipments
Recurrent Budget: generally the administrative costs and costs on soft programs e.g. health service extension , educational and others
Financing: share and loan provided to PEs, Principal and interest paid by the government (Nepal)

6. Budget formulation process... (Bottom-Up Process)
Institution
Role
Parliament
Approves the budget
Ministry of Finance
Consolidates the budget
National Planning Commission
Tripartite negotiation(Ministries, NPC and Ministry of Finance)
Ministries
Ministry level consolidation and refinement
Departments
Compile and refine
Spending Units
Prepare the programs and budget

7. Budget Implementation Process
Once the Parliament approves the budget, Ministry of Finance Provides "Authorization " for spending to the "Secretaries" of the Ministries
Secretaries provide authorization letters to the "Department Heads"
Department Heads provide authorizations to "Spending Unit Chiefs"
Spending Units spend money based on the approved programs
Revenue is collected by tax offices and other authorities

8. Budget implementation: Budget Release process
Spending Units spend the money and submit Payment Requests to the District Treasury Offices(DTCOs)
DTCOs verifies and entered the transactions into the TSA (Treasury Single Accounts) System (which is online/web-based central system)
DTCOs issue the Cheques against the payment requests and handover to the SUs
Spending Units pays cheques to the concerned parties/vendors

9. Budget review and audit process
Review Process:
Budget review is made by Development Action Committees(trimester basis)
-National Development Action Committee: Chaired by the Prime Minister
-Ministry Level Development Action Committee: chaired by Ministers
Ministry of Finance conducts Mid-term review
Sometimes Parliamentary Committees conducts review/query budget implementation

10. Budget review and Audit Process…..
DTO conduct "internal audit" on behalf of Financial Comptroller General Office
The Auditor General conducts final/statutory audit of government transactions
Public Accounts Committee of Parliament review the Report of the Auditor General

11. Strengths of Nepalese Budgetary process
Multi-year forecasts (MTEF, 3 Years forecast practices)
Budget Formulation Guidelines (2015) and implementation Guidelines
Budget Calendar
Spending based on the approved program
Online submission of budget by ministries to the MOF
Web- based Budget release system : the TSA system
Annual Statutory audit

12. weaknesses Line item budget : weak focus on "Program Budgeting"
Low level of revenue base (17 percent of GDP)
Weak productivity(especially of Capital budget, as well recurrent)
Calendars generally violated: eleventh hour workout
Weak internal control system
Performance audit is lacking
Parliamentary control (in practice) weak and sometimes biased

13. The Way forwards
Perspective budgeting( Medium-Term Budgetary Framework)
Focus on: productivity and 'programs'
Gear up capital budget (size and implementation)
Enhance 'implementation capability', 'internal control system' and 'M&E'
Performance audit
Strengthen parliamentary control
Follow the Calendar

14. your questions ? .

15. Thank you very much .