Increasing budget transfers raise concern over govt’s commitment to maintain fiscal discipline

Published On: April 15, 2021 07:30 AM NPT By: Republica | @RepublicaNepal

KATHMANDU, April 15: Three years ago in July 2018, the two-thirds majority government led by Prime Minister KP Oli announced that it would not make any budget transfer until the third or last trimester in order to maintain fiscal discipline.

But the government has carried out budget transfers amounting to over Rs 97 billion in the first eight and a half months (mid-July to March end) of this fiscal year, flouting its own set rule. The Ministry of Finance (MoF) unveiled the facts on Tuesday in the parliamentary Finance Committee meeting after coming under pressure from the committee members.

Budget transfer means transferring funds from one assigned program or project to another. In many cases, government agencies seek to adjust budgetary allocations after being unable to spend the earmarked money. Almost every year, the ministry allows large budget transfers toward the end of the fiscal year.

Raising concerns over the increasing budget transfers in Tuesday’s meeting, the members of the parliamentary committee also asked the government to provide details of such a transaction.

Until two years ago, the MoF had been publishing the amount of budget transfers on a periodic basis. However, it has stopped providing the information to hide the government’s flaws in budgetary management in a bid to avoid public criticism.

While unveiling the mid-term review of the budget implementation in January, Finance Minister Bishnu Prasad Paudel also admitted that the MoF was under pressure to transfer funds from the national priority projects to the non-budgetary headings due to the procurement of vaccines against COVID-19 along with the unhealthy competition to expand the institutional structures and more recruitment of staff by the government bodies.

Keshab Acharya, who served as an economic adviser to the finance ministry in the past, said the large budget transfers affect the government’s aim to maintain fiscal discipline. According to him, the prevailing practice of budget transfers has raised questions about the efficiency of the financial administration and it has also exposed the irresponsibility of the authorities that revise their own estimates of the budget allocated via the government red book.