Anirudra Neupane
Budget is a long process of which budget formulation is just one part. It includes budget approval, execution, reporting and auditing. Public oversight in the budget process involves public interest and participation in and scrutiny of major aspects of budget process.This starts from formulation of policies and programs and ends with reporting and auditing. Public participation in budget process is taken to be the building block of enhanced Public Financial Management (PFM).
Some important issues related to budget formulation process are still beyond public discourse in Nepal. Budget formulation starts in November, but debates outside the governments’ administrative structure starts only in Ashad (third week of June) when the draft proposal is expected to be ready. Those discussions center on the timing of releasing the budget rather than national priorities that should be reflected in the budget proposal. This creates limited opportunities for the media, civil society and people to correct possible mistakes in defining national priorities and budget allocation. Budget formulation should be the point of entry for public oversight. If it is not closely overseen by media and civil society, corrupt individuals get to play.
Oversight during formulation process starts when the Ministry of Finance (MoF) and National Planning Commission (NPC), in consultation with government agencies, forecast the size of budget and set the ceiling for each ministry and project. National priorities are set at this point. Public and parliamentary oversight is required to encourage each ministry and line agency to meaningfully define their priorities. Concerned agencies including MoF, NPC and cabinet must then review and evaluate the programs and budget proposed by each agency.
Before the final budget proposal is submitted to the parliament, media, civil society and people at large should be given an opportunity to provide their inputs. The current practice of pre-budget discussion does not contribute much in this regard because there is limited opportunity for people to critically review and give their feedback on national priorities set by the government. There is no provision of a pre-budget statement. Dissemination of a pre-budget statement listing national priorities is a basic requirement for constructive debates on national budget.
Budget execution starts with the approval of budget proposal from the parliament. As an important Public Finance Management (PFM) actor, the parliament is expected to connect people with policy. If serious discussions are held in the parliament, it contributes to enhancing parliamentary and public oversight. Parliament in a democratic system like ours is criticized for being a rubber stamp of the government because budget proposal normally gets approved in the same form it is presented. Approving the budget proposal without modification does not mean that parliament cannot exercise its power. If the parliament discusses important components of budget proposal seriously, it can inform the people. This prepares ground for reduced discretionary budget transfer and misuse of funds during budget execution.
Parliamentary committees and parliament itself are responsible for overseeing both budget formulation and implementation, and also for enhancing the role of people in the process. Unfortunately, parliamentarians in Nepal are hardly ever active in this respect. They only criticize the government for allocating little or no budget to tiny projects in their constituencies.
Budget execution involves revenue collection and spending. There are several areas of public concern on the revenue side. Public oversight is required to generate larger domestic revenue. This involves reducing tax evasion, making the process more scientific and transparent, and reducing tax expenditure (revenue losses for government due to tax rebates, concessions, tax refund, etc).
There are several critical areas for public oversight in the budget execution as well. Each ministry and project needs to get their budget sanctioned from MoF and NPC. If line ministries and projects are unable to submit their plan of action and progress report to MoF and NPC on time, budget sanctioning, and eventually program execution, get delayed. This results in under-spending at the end of fiscal year. MoF and NPC can amend, interchange or transfer budget from one head to another within the approved budget; the parliament, media and civil society should stay alert to prevent discretionary manipulation of approved budget.
Spending units should submit quarterly progress reports to MoF and NPC to get fund released on time. People should be aware of the possibility that there might be intentional delay on the part of field level spending units in requesting funds from MoF so that final installment is released during the last week of fiscal year. This makes the misuse of funds easy. Whether due processes are followed for public procurement and whether progress is rightly evaluated before making payments to contractors are other important areas that call for public oversight.
Off-budget expenditure has been a critical issue at the national level. Ministers spend large sums of money without approval from parliament and people.
There are serious problems in the use of local development budget as well. Political parties exercise authority over this budget, without accountability. Monitoring and reporting mechanism is weak, especially at the VDC level where huge chunks of local development budget are spent. Development budget intended to be spent on marginalized people is wasted. People at grassroots and local media should be empowered and encouraged to monitor and oversee spending at local level.
The Auditor General audits financial statements of most government agencies. Audit involves independent evaluation of financial statement to see if the public money is being efficiently and effectively used. Efficiency and effectiveness cannot be measured without consulting beneficiaries and other stakeholders. Unfortunately, very few people in Nepal know that public agencies are audited and audit report is given to each of those agencies. A consolidated audit report is submitted to the President before it reaches the parliament. But nobody cares whether the parliament’s public account committee discusses the report. Therefore, increased debates, discussions and public oversight are needed during auditing and after-audit phase.
PFM actors including government agencies, parliament and supreme audit institution, as well as non-state actors including civil society and media should work together to enhance public oversight at different stages of the budget cycle to realize better value for public money.
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