Budget calendar in shambles due to delay in amending laws

KATHMANDU: The federal government's task of budget formulation for the upcoming fiscal year 2025/26 has been delayed due to the need for amendments to relevant laws. The National Planning Commission (NPC) has halted the process of seeking plans and programmes from provincial and local levels, citing the lack of amendments to the Federal Supplementary and Special Grants Work Procedure.

Meanwhile, the Ministry of Finance (MoF) is uncertain about how to proceed with the budget preparation process for the upcoming fiscal year, as the Financial Procedure and Fiscal Responsibility (First Amendment) Bill, 2081, remains stuck in parliament.

According to the existing working procedure related to federal supplementary and special grants, the NPC should publish a notice by mid-December each year and solicit proposals from provincial and local levels for projects and programmes to be operated with grants under these headings for the next fiscal year. Similarly, provincial and local levels must submit proposals to the NPC by mid-January to receive such grants.

However, the NPC postponed the process of seeking proposals after the 53rd meeting of National Development Problem Solving Committee, chaired by the Prime Minister on November 15, decided to amend the existing working procedure related to supplementary and special grants. The Committee directed the NPC to prepare a draft of the working procedure and submit it to the Council of Ministers within three months.

NPC Vice-Chairman Shiva Raj Adhikari stated that although there will be some delay in seeking proposals for supplementary and special grant schemes and programmes, the process will gain momentum under the new and revised procedure. "We have tried to make it equitable by amending the procedure. The commission is in the process of amending the working procedure and sending it to the Council of Ministers," Adhikari said, adding, "The grants will be distributed in a more refined, inclusive, and equitable manner than in the past." He further stated that the NPC will extend the time to invite proposals for grants under these headings.

The Committee meeting decided to amend the working procedure to ensure that the share of investment in supplementary grants, as per the financial capacity of local levels and provinces, would be financially capacity-friendly and contribute to the enhancement of socio-economic equality. Similarly, the existing procedures are being amended to ensure balanced development of projects and programmes run under special grants, contributing to the uplift and development of discriminated classes or communities.

The principles and priorities, and policies and programmes of the budget brought by the government each year have not been adequately discussed. The issue of fixing the budget calendar was frequently raised in parliament. Point no. 29 of the annual budget for the last fiscal year 2023/24 stated that arrangements would be made to present the principles and priorities of the appropriation bill in the federal parliament by mid-March after determining the ministry-wise budget limit for the next fiscal year.

To implement this provision of the budget, the government issued the 'Financial Procedure and Fiscal Responsibility (First Amendment) Ordinance, 2080' last January. The ordinance paved the way for the government to present the principles and priorities of the budget in parliament by mid-March and also amended the earlier deadline to fix the ceiling of the budget. Through the same ordinance, the principles, priorities, policies, programmes, and budget for the current fiscal year 2024/25 were also brought. However, the ordinance could not be passed by parliament within the stipulated time and was repealed.

The government has registered the 'Financial Procedure and Responsibility (First Amendment) Bill, 2081' in the House of Representatives on August 16 to amend the budget calendar. Nevertheless, it is not clear whether the budget for the next fiscal year will follow the schedule of the existing Act, the provisions of last year's ordinance, or the bill currently under consideration in parliament.