Freedom Forum is happy to note that The Government of Nepal has unveiled the annual budget of the country for the fiscal year 2079-80(2022-23) in the constitutionally stipulated date of Jestha 15 (May 29).  Freedom forum which has been continually engaged in assessing transparency, citizen engagement, and strengths of formal oversight agencies on the budget process has however noted some flaws in this year’s budget.

  1. The Medium Term Expenditure Framework(MTEF), produced by National Planning Commission, whose main purpose is to ensure fiscal discipline in expenditures related to Capital or Development projects and while the annual budget is supposed to be aligned to the MTEF process, this is largely absent in Nepal’s budget process.
  2. The government did not produce Pre Budget Statement containing the basic contents such as principles and priorities of the executive budget proposal.
  3. As before, the government did not produce and make public The Citizen Budget, which is a non-technical and simplified presentation of government budget.
  4. It is the prime responsibility of the Ministry of Finance to timely disclose the budget documents online as per the international best practice. However, the official website has been shot down since the day budget was presented.
  5. Importantly The Red Book, which presents in-detail information on the Estimates of Expenditure as well as includes Summary of Budgetary Allocation for Fiscal Year, is not publicly available online. It is one of the most important and critical budget document for the users.
  6. Budget credibility that describes the ability of governments to meet their expenditure and revenue targets accurately and consistently has become weak with high level of deviation between approved allocations and expenditure. It raises the questions on the allocation efficiency, absorbing capacity and whether public financial management system is fit to ensure available resources are used effectively and efficiently.

The unavailability of key budget documents during the budget formulation stage has limited the flow of fiscal information to the public. Likewise, the shutdown of official website has constrained the access of citizens, journalists, civil society organizations and researchers to the critical fiscal information.

Against the backdrop, Freedom Forum recommends the government to bring out following reforms

  1. Budget literacy has been a pertinent issue in Nepal it is crucial for expanding citizens understanding on physical information and documents there is substantial need for introducing budget glossary as well as budget literacy measures.
  2. The executive should publish The Pre Budget Statement aligning the MTEF for the executive budget proposal so as to enhance policy-based budgeting.
  3. Executive need to publish the citizen budget highlighting the core activities and expenditures in a simplified manner so that common citizen can understand the budget in a better way.
  4. The government needs to prioritize improved spending in budget programs by removing bottlenecks and improve reporting for Budget Implementation and Explanations to improve budget credibility.