Nepal Scores 50 on Budget Transparency in Latest Open Budget Survey

Thursday, May 30,2024

Nepal improves open budget transparency index with score of 50 in the latest Open Budget Survey 2023. With the budget transparency score of 50, Nepal secured 59^th rank in overall position in 2023 which was 77th in 2021 according to the International Budget Partnership’s (IBP) latest Open Budget Survey indicating the improvement of public access to budget information in Nepal.

“In these turbulent times, governments can restore public trust in their ability to deliver by opening up the budget process to meaningful engagement. Engaging the public is a winning proposition. As the pages of this report illustrate, despite slow progress in the survey’s global averages for budget transparency and public participation, there are several examples of countries that are benefiting from more transparent and inclusive budget practices” said Ana Patricia Muñoz, Executive Director of IBP. She Further added that an open budget process is critical to supporting the ability of democratic governments to deliver tangible gains to their people.

The Open Budget Survey 2023 assessed 125 countries, which are home to 95% of the world’s population and include budgets totaling more than $33.5 trillion in spending in Fiscal Year 2022. This locally-led process was conducted with in-country researchers, peer reviewers, and government reviewers who completed 30,000 indicators across all surveyed countries, assessing 672 publicly available budget documents and 299 participation mechanisms. This latest round comes at a turbulent time of unprecedented challenges. Rising debt, inflation, conflicts, closing civic space and climate change have led to serious setbacks for many.

Global budget transparency has increased by 24% since 2008, but it is still well below what is considered sufficient (a score at or above 61 out of 100) to allow for meaningful public engagement. Legislative oversight is also well below sufficient levels, and public participation is rare. Average audit oversight scores are sufficient, but challenges remain to ensure governments follow up on audit reports. The pandemic provided an excuse for many executive governments to sidestep the legislature in its budget practices, and legislative oversight practices have not bounced back since

Nepal has improved the availability of budget information with publication of key budget documents, mainly Year-End Report in time which however was published late in the previous cycle of open budget survey in 2021. The pre-budget statement (PBS) and Citizen Budget status remains same to that of previous years, according to the 2023 Open Budget Survey Nepal summary report.

As the research by IBP and other organizations demonstrates, open budgets offer a promising pathway for countries to thrive socially and economically. They can restore trust in governments and strengthen strained relationships between public institutions and the people they are meant to serve.

The OBS 2023 survey provides a telling snapshot of Nepal’s current practices related to budget disclosure, opportunities for public engagement in the budget cycle, and effective checks and balances. The Measures of Open Budgets: Budget transparency is assessed in the OBS by the public availability and contents of eight key budget documents that all governments are expected to publish as per international standards. Specifically, the survey examines whether they are
published online in a timely manner and the information is comprehensive.

• The global average transparency score was 45 out of 100, short of 61 considered minimum threshold to foster an informed public debate.
• Nepal scored 50 in budget transparency which is above the global average.

Public participation is assessed based on formal opportunities for civic organizations and individuals to engage and provide input throughout the budget process.
· The average global score for public participation is dismal: 15 out of 100.
· Nepal scored 31 in public participation in budgetary process.

Oversights measured based on the role played by legislatures and supreme audit institutions (SAIs) in the budget process.

• A score of 61 out of 100 is considered adequate oversight and global average is of Legislature oversight is 45 and SAIs oversight is 62.
• Nepal scored 36 in legislature oversight which is lower than global average whereas SAIs oversight is 67 which exceeds global average.

Nepal government could quickly improve the situation by:

• Include in the Executive’s Budget Proposal data on the financial position of the government, data on the macroeconomic forecast and data on estimates of expenditure arrears.
• Publish a glossary of budget terms along with Executive Budget Proposal to improve budget literacy.
• Improve the comprehensiveness of the Enacted Budget as well as other budget documents by publishing disaggregated and machine readable data.
• Include in the In-Year Reports (monthly and quarterly Economic Bulletins), actual expenditures for administrative classification, functional classification, and individual programs, including information of the budget execution at the sub-national level (provinces and municipalities).
• Include in the Year-End Report comparisons between planned revenues and actual outcomes, comparisons between planned nonfinancial outcomes and actual outcomes and comparisons between the original macroeconomic forecast and actual outcomes.

Likewise, Nepal needs to work on improving the public participation in various budget process where Nepal is far behind from the sufficient score of 61:

• Continue and sustain the practice of pre-budget consultations with stakeholders, including at the provincial level, and submit its report to the Parliament. Additionally, the Ministry of Finance and the Revenue Advisory Committee should have a practice to inform the citizens on which recommendations and inputs received were used to improve budget policies.
• Actively engage with vulnerable and underrepresented communities, directly or through civil society organizations representing them.
• Implement the actions of the National Strategy for Public Engagement in Public Financial Management, which was published jointly with the PEFA secretariat and after extensive consultations with civil society.

Even though Supreme Audit Institute of Nepal oversight sufficient and is above global average, Nepal’s Federal Parliament provides weak oversight during the planning stage of the budget cycle the implementation as well. To improve oversight, the following actions should be prioritized:

• The Executive’s Budget Proposal should be submitted to legislators at least two months before the start of the budget year.
• Legislative committees should examine the Executive’s Budget Proposal and publish reports with their analysis online.
• A legislative committee should examine in-year budget implementation and publish reports with their findings online.
• In practice, ensure the legislature is consulted before the executive shifts funds specified in the Enacted Budget between administrative units or reduces spending due to revenue shortfalls during the budget year.
• A legislative committee should examine the Audit Report and publish a report with their findings online.

IBP first launched the survey in 2006 with the goal of assuring that all citizens, especially those from underserved communities, have the opportunity to understand and influence how public money is raised and spent. Data are collected by independent civil-society budget experts who are not beholden to any national government. Their findings are reviewed by anonymous peers, and representatives from the assessed governments are offered the opportunity to review and comment on the findings.

Taranath Dahal, Krishna Sapkota & Subash Dahal of Freedom Forum were researcher for Open Budget Survey 2023 from Nepal.

Please visit https://internationalbudget.org/open-budget-survey/open-budget-survey-2023 for Open Budget Survey 2023 Global Report.

The Nepal Open Budget Survey 2023 reports are available in both Nepali and English Language in Freedom Forum Website.

Open Budget Survey 2023 English – https://freedomforum.org.np/download/obs-nepal-2023-english/

Open Budget Survey 2023 Nepali – https://freedomforum.org.np/download/obs-nepal-2023-nepali/

For more information,
Freedom Forum
info@freedomforum.org.np