Nepal’s Budget Transparency – Weak Public Participation and Parliamentary Oversight

Kathmandu, Sept. 12: Nepal has cherished the national dream of graduating from the status of Least Developed Country (LDC) to Developing Country by 2022. However, the landlocked country is facing several challenges including sluggish economic growth, stagnant development progress and ineffective mobilization of funds, among others, to its long march towards prosperity.

As a result, an effective and efficient budget system of the country coupled with mechanisms to provide public with opportunities to engage in the budget processes and oversight agencies to check wise spending of public resources is critically important to address the problems. But ironically Nepal lacks adequate systems for ensuring that public funds are used in a transparent and accountable manner for attaining effectiveness – a key indicator of country’s development potential and graduation.

Nepal’s score in the Open Budget Survey (OBS) has dropped to 24 out of 100 in 2015 from 44 in 2012 which shows the country’s dwindling budget transparency situation. Furthermore, the International Budget Partnership (IBP)-managed global survey reveals that the Government of Nepal provides the public with minimum budget information limiting chance for citizen engagement in the budget process.

Likewise, Nepal’s score on public participation front this round is merely 19 out of 100 which is lower than the global average of 25. Budget oversight by the legislature is weak at 18 while oversight by the supreme audit institution (Office of Auditor General) is adequate at 75 out of 100.

Nepal’s score of 24 out of 100 is substantially lower than the global average score of 45, states the Open Budget Index – the world’s only independent and comparative measure of budget transparency, participation and oversight. Nevertheless, the regression in transparency observed in Nepal appears to be temporary in nature. The decline in score was largely due to its failure to make the fiscal year 2013-14 Executive’s Budget Proposal publicly available.

Since the end of OBS research period on 30 June 2014, Nepal has returned to its previous practice of publishing the budget proposal in a timely manner. The OBS uses 109 indicators to measure budget transparency assessing whether the central government makes eight key budget documents – Pre-Budget Statement, Executive Budget Proposal, Enacted Budget, Citizen Budget, In-Year Report, Mid-Year Review, Year-End Report and Audit Report – available to the public in a timely manner. It also looks to see whether the data contained in these documents are comprehensive and useful.

The OBS 2015 examines 102 countries from around the world, measuring three aspects of how governments are managing public finances. In the South Asia regional comparison, Nepal ranks last in OBS-2015 with 24 while Bangladesh tops the list with 56 followed by India (46), Pakistan (43), Afghanistan (42) and Sri Lanka (39).

While marking change over the time, Nepal had scored 36/100 in OBS-2006, 43 in 2008, 45 in 2010 and 44 in 2012. The comparison table of the survey demonstrates that Nepal never produced and made available the Pre-Budget Statement and Citizen Budget out of eight key budget documents to the public in previous years.

Since 2012, the Government of Nepal has increased the availability of budget information by improving the comprehensiveness of the Enacted Budget. However, it has decreased the availability of budget information by failing to publish the Executive Budget Proposal in a timely manner. Moreover, the government has again failed to make progress in producing a Pre-Budget Statement and a Citizen Budget – two important budget documents opening up avenues for public participation in the budget process.

The OBS-2015 has recommended Nepal to publish consistently the Executive Budget Proposal in a timely manner, produce and publish a Pre-Budget Statement and Citizen Budget, increase the comprehensiveness of the Year-End Report by presenting more details on planned versus actual debt and interest, as well as on the planned versus actual macroeconomic forecast in its endeavor towards improving budget transparency.

Likewise, towards improving public participation, Nepal needs to establish credible and effective mechanisms (i.e. public hearings, surveys, focus groups) for capturing a range of public perspectives on budget matters, hold legislative hearings on the budgets of specific ministries, departments, and agencies at which testimony from the public is heard, establish formal mechanisms for the public to assist the supreme audit institution to formulate its audit program. In the similar manner, Nepal should establish a specialized budget research office for the legislature to enable more robust discussions on the budget, ensure the executive receives prior approval by the legislature before implementing a supplemental budget, ensure the legislature is consulted prior to the allocation of funds in the Enacted Budget, the spending of any unanticipated revenue, and the spending of contingency funds that were not identified in the Enacted Budget.

“The public needs access to budget information and opportunities to participate throughout the budget process. Coupled with oversight by legislatures and audit institutions this contributes to a more accountable use of public money,” said Warren Krafchik, Executive Director of IBP – an organization which collaborates with civil society organizations around the world to use budget analysis and advocacy as a tool to improve effective governance and reduce poverty. “A growing body of evidence indicates such budgetary checks and balances yield better outcomes for people, especially those who are poor or vulnerable.”

Since budgets are the most powerful tools of the government to deliver its plans and programs and address country’s development needs, its openness matters much to the people. With improved level of budget transparency, public participation in budget process and oversight agencies including legislature, Nepal in future can realize its dream of elevating to a country with ‘developing’ status and thereby distribute fruits of being open to its citizenry.(By Krishna Sapkota). RSS