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Budgetary framework and its relationship with development

plan

The views expressed in this presentation are the views of the author and do not
necessarily reflect the views or policies of the Asian Development Bank Institute Karna Prasad Timilsina
(ADBI), the Asian Development Bank (ADB), its Board of Directors, or the Chief Customs Officer
governments they represent. ADBI does not guarantee the accuracy of the data
included in this paper and accepts no responsibility for any consequences of their Nepal
use. Terminology used may not necessarily be consistent with ADB official terms.
Prosperous Nepal happy Nepali ---- Vision of 15th
plan

Present Status ,
Revenue 24.6% of GDP
Average annual growth of revenue 20.4 % in last 10
years
Foreign aid 3.3% of total GDP
Per capita income 1012 USD
Policy priorities
• government have set a five-year target of doubling
per capita income, high and equitable national
income
• agriculture production, achieving double digit
growth,
• completing a few mega projects,
• creating sufficient employment opportunities
• Good governance and well being standard of living
• Prosperity and Happiness is main target
National fiscal governance, or
domestic fiscal frameworks, can be
defined as those rules, regulations
and procedures that influence how
budgetary policy is planned,
approved, carried out, monitored
and evaluated. This includes
particularly:
Fiscal government objectives
• attaining sound budgetary positions in
particular by containing the deficit bias, i.e.
tackling the tendency to conduct unsustainable
fiscal policies giving rise to high deficits and
increasing debt ratios,
• reducing the cyclicality of fiscal policy making
and
• improving the efficiency of public spending.
Major guidelines for budget
Finance Minister shall present the estimate of the
revenue and expenditure for every fiscal year before
the joint meeting of the houses(parliament) (Article
119): fixed date jestha 15 for budget presentation .
-Estimates of Revenue
-Expenditure (Non –votable amounts): above
consolidated fund
-Expenditures from consolidated fund
-Progress of the past year
• National Natural resource and fiscal commission act
2017
• Inter governmental fiscal management act 2017
Budget formulation process top down
• Budget and Resource Committee at NPC set the
following:
-Macroeconomic Framework
-Medium Term Expenditure Framework
-Size of the budget
• Major responsibility Ministry of Finance set the budget
ceiling
• Budget ceiling is circulated to the ministries, ministries
to departments and departments to spending units and
province and local government
• Budget Formulation Guidelines 2072 has set the
formulation calendar(Start from November)
Bottom up
Principle of budget distribution
to province and local government
• Revenue sharing
• Fiscal equalization grants
• Conditional grants
• Internal loan
• Regular meeting of inter governmental fiscal
management committee
Central government allocation the budget basic of
above principle with the recommendation of
National natural resource and fiscal commission
Priorities of budget 2018
Strategic Project-Centric Investment to Kick Start High
Economic Growth
Modernization and Commercialization of Agriculture, Industry,
Tourism and Service Sector
Catalytic Business Environment: Encouraged Investment
Rapid Economic Development through Coordinated
Mobilization of Government, Private and Cooperative Sectors
Quality Improvement in Education, Health and Drinking Water
Services
Social Protection: State Responsibility
Development for all , balanced development & scientific use of
land
Budgetary system reforms and resource management .
Basic of Plan formulation
• Directive Principles and Policies of the Constitution
• Political party manifesto
• Other sectorial perspective plans
• SDGs and other government commitments, and
• Domestic issues (like inflation, low growth,
unemployment etc)
• Contemporary Challenges of the development (like
climate change and global economic, fuel and food crisis)
Effectiveness of budget for Plan
• Multi-year forecasts (MTEF, 3 Years forecast
practices)
• National Natural resources and fiscal commission
• Budget Formulation Guidelines (2015) and
implementation Guidelines
• Budget Calendar
• Spending based on the approved program
• Online submission of budget by ministries to the
MOF
• Web- based Budget release system : the TSA
system
• Annual Statutory audit
Strength of Budget system

• Perspective budgeting( Medium-Term Budgetary


Framework)
• Focus on: productivity and 'programs'
• Gear up capital budget (size and implementation)
• Enhance 'implementation capability', 'internal control
system' and 'M&E'
• Performance audit
• Strengthen parliamentary control
• Natural resource & fiscal commission - for
recommendation to MoF
MTEF
MTEF is a three‐year framework of public
expenditure
• It is a tool for determining the available
resources and allocating these resources in line
with government priorities
• It is a transparent planning and budget
formulation process
• It helps to match top‐down resource envelope
with bottom‐ up medium‐term costs of existing
policy in the context of the annual budget process
Role of MTEF
• Three year rolling budget, link the periodic plan
objectives to annual budget’s programs and activities
• Clearly defines priority of proposed programs and
projects of the five year plan that contribute the
poverty reduction most.
• Help to formulate development budget, predict
government future expenditure
• Help development budget formulation more realistic
Helps to prioritize the development activities into
priority 1(P1), priority 2 (P2) and priority 3(P3) listed in
the annual budget during budget formulation.
.
Summary
• identifying factors affecting alignment between
strategic plans and annual budgets;
•Policy priorities
•15th 5 years plan and budget forecasting
•Policies and institution are established for fiscal
government
•MTEF has key role to main fiscal governmance
and plan formulation
Constitutional provision of Auditing system of
Budget and Program
Any questions ?

Thank you !