KATHMANDU, March 4: The government has directed that only projects registered in the project bank be included in the budget for the upcoming fiscal year 2025/26. The Ministry of Finance issued this directive while offering inputs on budget preparation under Section 8(1) of the Financial Procedure and Fiscal Responsibility Act, 2076 BS.
The Ministry of Finance's guidance states that only projects entered into the National Planning Commission's project bank should be included when proposing projects. The guidance specifies, "When proposing new projects and programs, include only well-prepared, quality projects that are deemed feasible through cost-benefit analysis." The Ministry of Finance, which has started preparing the budget based on the National Planning Commission's budget ceiling of 19 trillion, has issued this directive to other ministries.
The guidance states, "Propose the budget for new programs and projects only after allocating sufficient funds for the completion of ongoing projects in the upcoming fiscal year." It directs authorities to discourage spreading resources across small projects, reduce the number of sequential projects, suspend projects that cannot be implemented or are of low priority, and propose only those projects that are feasible for implementation.
The guidance also states that for new projects that have not completed studies, departments should not allocate the budget for implementation. Instead, they should propose the budget only for the study and preparation work of such projects. It advises against proposing new projects and programs without ensuring resource availability.
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Based on the implementation experience of ongoing programs and projects, restructuring and integration should be carried out if necessary to make them more organized and effective. Furthermore, when proposing projects, departments must ensure no duplication between ministries, maintain inter-agency coordination to mitigate risks based on disaster sensitivity, and prioritize post-disaster reconstruction work when proposing the budget.
The Ministry of Finance has asked ministries to focus more on reducing public expenditure due to pressure on resource management. It has also instructed them to make the upcoming fiscal year's budget realistic, implementable, and results-oriented by enhancing cost efficiency. Ministries must define their work accordingly and enter their projects and programs into the Ministry's Budget Information System.
The guidance advises ministries to propose annual programs and budgets within the received budget ceiling, ensuring realistic budget proposals that minimize reallocations and program revisions during implementation. It directs them to classify programs and projects according to the 2080 classification criteria. To maintain allocation efficiency, the budget should propose only activities directly related to the project's objectives and include activities that create long-term liabilities in the programs and projects.
The guidance also recommends proposing only essential budgets for current expenses while maintaining austerity. Additionally, it instructs ministries to consolidate and organize activities of the same nature that are currently included under different subheadings and programs starting from the upcoming fiscal year.
The Ministry of Finance has directed ministries to propose adequate funds for foreign aid projects, ensuring they align with the implementation schedule of ongoing and new projects. The circular also instructs ministries to propose the necessary budget based on the payment methods specified in the aid agreements for the relevant projects and activities. Additionally, the ministry has requested ministries to prepare and submit a detailed estimate of the revenue concessions required for foreign aid projects under their jurisdiction, under the terms of the agreements, by March 28, 2025.
The Ministry of Finance's guidance states that ministries should propose the budget for other projects and programs only after allocating the amount required to fulfill financial obligations for projects and programs that have received resource agreements for the fiscal year 2025/26. It also directs ministries to re-prioritize and manage projects with secured resources that do not require continuous implementation based on priority for effective resource management.
The guidance directs ministries to propose the amount required to fulfill created obligations for legitimate expenditures in various projects and programs. It also emphasizes that, due to a reduction in budget allocation for national pride projects over the past two years, ministries should propose sufficient budgets based on the prioritization and recommendations provided by the National Planning Commission for the fiscal year 2025/26.
