MoF directs ministries to stop pushing for non-budgetary programs and funds

Published On: December 1, 2018 08:22 AM NPT By: Republica  | @RepublicaNepal

Finance ministry received demand of Rs 43.75 billion for non-budgetary programs in four months 

KATHMANDU, Dec 1: The Ministry of Finance (MoF) has circulated a notice to all ministries not to push for non-budgetary programs and budgets. 

The circulation came two weeks after the parliamentary Finance Committee issued directive to the government to stop financial indiscipline in the budgetary system. 

During a discussion on the matter of public financial management two weeks ago, the MoF had reported that it had so far received a demand of Rs 43.75 billion for various non-budgetary programs, and that a majority of them included politically motivated projects and programs coming through political and bureaucratic connections. 

Experts say it is a sheer financial indiscipline to approve new programs and allocate budget for projects not specified in the country’s annual budget, except for some justified urgencies, but this has been a culture over the recent years. 

Secretary of the Ministry of Finance Shishir Kumar Dhungana said ministries were also asked to stop demanding projects and programs by issuing circulars. 

“They are also asked to report due amounts of government’s liability for the implementation of past projects to clear any outstanding dues,” Dhungana said. 

The government’s pending liabilities are also mostly of the projects and programs awarded out of budget in the past years. Such non-budgetary spending was probably at its peak in the last fiscal year, when projects and programs worth over Rs 120 billion were allocated out of the annual budget. Such spending was largely manipulated by politicians in the government. 

Ministry of Agriculture and Livestock Development had a record high demand of Rs 12.48 billion, while the Ministry of Energy, Water Resources and Irrigation had demanded budget of Rs 7.85 billion. But both the ministries have only spent 14 and 13.69 percent of the allocated budget, respectively, in the first four months of the current financial year. 

Speaking at the Finance Committee two weeks ago, former Finance Minister Surendra Prasad Pandey had said that non-budgetary demands were critical in the country’s financial management. 

“This is a sheer financial indiscipline to demand more funds for non-budgetary programs, while sitting on huge amounts of unspent budget and not prioritizing the urgent tasks of tender bids, project execution, and project monitoring,” Pandey said. 

The Finance Committee had also met in the first week of October to discuss the issue of accelerating capital expenditure. The government was asked to spend minimum 60 percent of the total budget project-wise within mid-December while such spending should be 90 percent by the end of mid-June or 11 months of the financial year. The committee had said spending should be capped at 10 percent in the final month. Currently, over 30 percent of capital spending is done in the last month of the fiscal year (mid-June to mid-July). 

Concentration of spending toward the end of the fiscal year has been causing ineffective spending during the process of project implementation, leading to very slow progress of development projects.

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