National Resource Estimation Committee Sets Budget Ceiling at NPR 1.89 Trillion for Upcoming Fiscal Year

Kathmandu. The National Resource Estimation Committee has set the budget ceiling for the upcoming fiscal year (2083/084) at NPR 1.89 trillion for the Ministry of Finance.

Following the setting of this ceiling, the Ministry of Finance has intensified preparations for the next fiscal year's budget. With the committee determining the ministry-wise ceilings, ministries and subordinate bodies have begun discussions on budgets and programs.

Although the budget and programs will be formulated by the government led by the Rastriya Swatantra Party, which secured a majority in the recently concluded elections, the Ministry of Finance is currently working on the procedural aspects of budget formulation.

Officials at the Ministry of Finance state that they are awaiting the decision of the new government regarding the preparation of the budget and programs.

Ministry of Finance Spokesperson Tankaprasad Pandey stated that the procedural aspects of budget preparation are continuously moving forward. According to him, work is underway to advance the ceiling provided by the committee and the procedural work according to the decision of the new government once it is formed.

Spokesperson Pandey said, 'It remains to be understood what kind of budget the elected government will expect. They will bring their own plan for resources. The Ministry of Finance will proceed accordingly. Discussions are currently underway regarding ministry-wise budgets and programs. The new government may make changes to these later.'

The budget currently in implementation for the current fiscal year is NPR 1.964 trillion. However, the Ministry of Finance, through the mid-term review, has projected an expenditure of only NPR 1.688 trillion.

It is estimated that the ceiling might increase to implement the ambitious programs included in the manifesto published by the RSP, the party that gained a majority through the elections.

According to the Economic Procedures and Financial Responsibility Act, the National Planning Commission must forecast the available resources and expenditure limits for the next three years by the end of Magh of the current fiscal year. In accordance with this provision, the committee has already provided the ceiling to the Ministry of Finance.

Finance Minister Rameshwar Prasad Khanal has concluded his tenure, organizing the preparation for the next fiscal year's budget formulation and programs. As the formation of a new government became certain, Minister Khanal, while presenting his tenure completion report, stated that the ministry has set policy reforms and limits for the upcoming budget.

Minister Khanal informed that the Ministry of Finance has already sent the budget ceiling to all agencies and sectoral ministries, remaining within the recommended limit of NPR 1.89 trillion.

Sectoral ministries are currently preparing their budgets based on the set limits and guidelines. According to the ministry's schedule, relevant ministries must enter their programs and budgets into the 'LMBIS' system by Chaitra 15.

Key Reforms in Budget Formulation

Finance Minister Khanal stated that he has taken some significant steps to remove anomalies in the budget system, the impact of which will be visible in the upcoming budget.

For the next year's budget formulation, the amount agreed upon for the Budhigandaki Reservoir Hydropower Project and NPR 12 billion for the Health Insurance Program have been 'earmarked' (fixed) within the budget ceiling. Arrangements have been made to mandatorily consider these matters during budget formulation.

Finance Minister Khanal stated that the practice of arbitrarily agreeing to multi-year projects and not accounting for liabilities has ended. A new arrangement has been made where only projects expected to be completed in less than 3 years will be included in the medium-term expenditure framework. He expressed confidence that this will increase budget allocation efficiency and ensure projects are completed on time.

Payment from Budget Instead of Revenue Exemptions

The Ministry of Finance is preparing to stop all forms of revenue exemptions starting from the next fiscal year. Due to revenue exemptions provided for projects including foreign aid projects not reflecting the actual cost of the project and increasing the risk of misuse, a system will be implemented where, if revenue exemption is required as per the agreement, it will be paid directly from the government's budget instead of granting the exemption.

Before presenting the budget, a meeting of the Inter-Governmental Fiscal Council will be held, and plans are being made to further systematize the distribution of royalty and equalization grants provided to lower-level governments as per the recommendations of the Natural Resources and Fiscal Commission.

Khanal, who took charge of the Ministry of Finance amidst economic slowdown and pressure on revenue collection, claimed that the upcoming fiscal year's budget has laid the foundation for maintaining fiscal discipline and improving the business environment.