Process of Budget Formulation in Nepal
The budgeting process in Nepal, like in many other countries, follows a structured approach involving several key stages. Here, we will outline the main steps in the budgeting process with special reference to Nepal, including preparation, approval, execution, control, review, and auditing.
- Needs Assessment: The budgeting process typically begins with a thorough assessment of the country’s economic, social, and development needs. In Nepal, this assessment takes into account the specific challenges and priorities of the nation, such as healthcare, education, infrastructure, and agriculture.
- Revenue Estimation: The government estimates its expected revenue from various sources, including taxes, grants, and loans. This assessment helps determine the available funds for the budget.
- Sectoral Allocation: Different government ministries and agencies prepare their budget proposals based on the needs within their respective sectors. For example, the Ministry of Health and Population would propose a budget for healthcare-related programs and services.
- Budget Proposal Submission: Ministries and agencies submit their budget proposals to the Ministry of Finance, which consolidates these proposals into a comprehensive budget document.
- Parliamentary Review: The budget is then presented to the Parliament for review and approval. Members of Parliament scrutinize the budget to ensure it aligns with the nation’s priorities and is financially viable.
- Amendments and Approval: After deliberations, the budget may undergo amendments, and once approved by the Parliament, it becomes the national budget.
- Budget Implementation: With the budget approved, government agencies and ministries begin implementing their allocated programs and projects. Funds are disbursed as needed for these activities.
- Monitoring and Reporting: Ongoing monitoring and reporting mechanisms are crucial to ensure that budgeted funds are being spent as intended. In Nepal, this involves regular reporting to the Ministry of Finance.
- Financial Management: The Ministry of Finance plays a central role in financial management, overseeing expenditure and revenue collection to maintain fiscal discipline.
- Auditing: Internal and external audits are conducted to ensure compliance with financial regulations and the proper use of public funds.
- Mid-year and Annual Reviews: Periodic reviews of the budget’s performance are conducted to assess whether goals and targets are being met. Adjustments may be made if necessary.
- Evaluation: Beyond financial reviews, the impact and effectiveness of budgeted programs and projects are evaluated to determine their contribution to national development goals.
- Financial Audit: Independent audit agencies, such as the Office of the Auditor General in Nepal, assess the financial statements of government entities to verify their accuracy and legality.
- Performance Audit: Audits also include evaluating the efficiency and effectiveness of government programs and projects.
In Nepal, as in many countries, the budgeting process is a critical aspect of governance, ensuring that public funds are allocated and spent in a transparent, accountable, and responsible manner. This process helps address the unique challenges and priorities of the nation while promoting economic and social development.